Of course it is no secret that the key word in writing fiction is IMAGINATION, and fantasy writing, being under the bigger umbrella of what we call speculative fiction, relies heavily on this.

Does this mean that anything and everything is possible in fantasy writing?

Yes and No.

Yes, because the writer is always free to create new species, magic, strange phenomena, and even stranger characters, cultures, and worlds that defy physics, BUT... (there is always a but...)

Fantasy writing still adheres to the idea that the story or its basic premise must be something familiar and relatable. Characters must still behave in a logical way and readers respond to having the same experiences.

 We are able to effectively imagine, and describe a certain creature, character, or phenomenon by relying on what is familiar, and we create something new by mixing this with new, interesting ideas.

Mix and match the familiar with the unfamiliar, re-imagine them to fit the fantastic world you are building. The possibilities are endless... but it has to start with an IDEA that you think is interesting enough to explore.