While people do like inserting powerful gods who can rock shit into their fantasy (they provide a convenient and massive mythology and help make a world more authentic) the fact of the matter is that people don't like classic jackass gods like the Greek pantheon or the Exalted gods. Or rather, they like the jackass gods as long as those jackass gods aren't fucking up their shit.
Fair enough. So that the solution to all this was to insert 'good' gods into the setting. Anyone with half a brain or moral fibre should feel extreme ambivalence at about working for any god not named Hades or Prometheus (the former of which had his own evil shit, just not as much), but when you're working for Bahamut or 4th Edition Pelor you can actually feel good about it. I mean, Ioun supports building free libraries and universal literacy which is a laudable goal.
The only problem is... why is the Heroic Fantasyverse such a shithole? I expect a certain amount of shittiness inherent in any setting as violent as the D&D campaign setting, but this shithole goes above and beyond the call of dooty (:hehehe:) Why are people still using feudalism? Why isn't Ioun distributing scrolls of 'Ultimate Crop Yield' that he personally researched? Why won't Pelor roll down and go 'look, here's how you kickstart the green revolution'?
- The gods aren't actually good, they're just jackasses. Which creates disillusionment and grimdark and a lot of people don't like that.
- The gods are extremely ignorant and can't think of a better way of life for their subjects. This ignorance heads straight into Grey's Law territory considering how awful their ignorance is and is just as bad as the first problem.
- The gods aren't actually all that powerful and/or can't interact with the setting directly. This is straight up the Yahweh-problem, creating dissonance between their feats and their current powers. Oh, sure, Demeter could single-handedly create a year-wide harvest around the fucking world (she needs to do something this special, otherwise no one would remember her name), but she couldn't do that today even if she wanted to. That's lame and contrived.
- The Voltaire solution. The gods somehow 'know' that this is the best world to live in and if they accelerated sapient happiness and progress it would backfire horribly--some kind of bullshit Malthusian crisis or the gnomes develop the atom bomb or whatever. But this just makes the setting all of the more hopeless and grimdark, because this is the best of all possible worlds.
- The Balance of Good And Evil. For some reason, having balance is more important than freeing slaves or feeding children. Some authors will have some stupid side effect towards having 'good' overwhelm evil, but most will just axiomatically state that the Balance is uber-important in of itself. Lame.
The bottom two are considerably better IMO but are considerably rarer.
- A New Day Is Dawning. Things used to suck hardcore but the Good Gods broke their imprisonment or they got a clue or they won Ragnarok or whatever. The thousand-year cycle of people tilling the soil on a 1500 calories a day is about to come to an end, because RIGHT NOW Carl Glittergold is giving out Miracle Seeds for free in the town square and Kord is threatening to personally come down and lop off the head of the Emperor if he doesn't free all of the slaves and hold elections open to everyone.
- Life Is Good, Depending On Where You Live. Gods, rather than having dominion over the whole realm, only have control over specific geographic areas. So the places where Avandra or Pelor or Prometheus (or some combination of the above) are dominant, life is actually pretty sweet. It's just in the places where Hextor or Gruumsh are dominant are the places that suck balls.
The problems with this is that is starts to raise the question why the 'good' realms aren't curbstomping the 'bad' realms. They have more educated, better fed, happier, and less diseased people (and more of them, too). There's no reason why they shouldn't be easily overcoming the 'bad' lands unless there's some massive advantage the 'bad' gods get on their home turf. This really isn't a solution more than a setup; either the good gods are slowly willing after all and then your campaign setting will look like A New Day Is Dawning, or the good and evil gods are at some kind of stalemate and you have hopeless grimdark anyway. It's just that only half of the people live in abject misery now. An improvement, but not that much. - Evil Is Winning. It's not a total route like in, say, WH40K but they did win pretty hardcore. They did some shit like dethrone the head Good God, they have more people on their side, they have some Ultra Artifact, whatever. The point is that the Good Gods really do realize what a shithole the world is and keeping it in medieval stasis is the absolute best that they can do. Bahamut is personally fucking pissed that the biggest lizardman tribe is practicing child sacrifice, but Tiamat will intercept him and whup his ass if he tries to intervene. Erathis has tried really, really hard to pass down the secrets of sewage systems to the people living in cities but Papa Nurgle is just around the corner to bribe the Guildmasters to forget about the whole project and spend the money on hookers and blow.
The third paradigm also means either making heroes much more powerful and setting-affecting than they were in 4th Edition D&D or eliminating the idea of Hell being able to undo decades worth of heroics by releasing a single Balor into a populated town. Whichever.
Of course the three biggest things fantasy writers could do to alleviate this problem in the first place are to A) stop idolizing poverty. B) stop idolizing Tolkein. C) stop idolizing ubermensch. This may be an utterly impossible task, in hindsight.