Alternate History, Steampunk, Historical Fantasy (Fantastical History?) and many more subgenres all do something very similar: they take what was and give new possibilities or mystic reasons why. I just finished reading Under Heaven by Guy Gavriel Kay, and the fantasy elements were so light touched as to feel more like a new telling of a very old myth. It was also great to see some fresh fantasy going into other cultures than European based. The story, however, had much less overt magic and mysticism than that of say Jonathan Strange and Mr. Norrell by Susanna Clarke. For a long time, when I went searching for my reading, I wanted to visit an entirely new place. Sure, it could feel a bit like Earth -- maybe an Earth from very long ago, but I wanted to go 'elsewhere.' After visiting the dynastic world of Under Heaven and touring the countryside of England and France in the fantastical possibility created by Susanna Clarke, I find myself drawn to these possible other times more than before. Quantum alternate universes? That's a discussion for another time.
So, you tell me: Does your fantasy need to be otherworld or are you happy to imagine the "What ifs" of our own past?