A critical component of modern fantasy writing is the process of world-building. You have a story to tell. Where will it be set? What are the unique characteristics of this world that separate it from Earth or any other? What kind of creatures and people live there? What is the culture of each of these? And a host of other questions must be addressed.
I’ve been involved with world-building for a good portion of my life, though for many years, my world-building was limited to a pen and pencil RPG environment. The needs of RPG world-building are somewhat similar to the needs of literature world-building, but I think the RPG environment requires more extensive work. After all, in an RPG game, the players decide where to go, not the gamemaster—no, the GM must be prepared for any eventuality. In writing, however, the author decides on everything. If the main characters of the novel are not heading into the arctic region of the world, there is no need to develop that region. I think this is a lesson I was a little slow in learning. For a while, I was spending one day out of the week on world-building while I wrote my next novel. The problem was: I was generating more material than I needed. I had several evil races and creatures in the area of Drisdak, but as it turns out, I will have difficulty working in just one. I think a more focused approach is called for.
What are the essentials? Well, I think geography is critical. I do have maps of my world (but I don’t have access to a scanner, so I can’t include them in my books yet). In any event, the maps I do have keep me from placing Drisdak north and south of Ansellian at the same time. That will prevent any number of embarrassing slip-ups like that. Additionally, you need to have some thoughts and ideas in place for the cultures of each of the main characters. Details of their religious orders, and what have you. This helps in developing the characters, their conflicts, and their beliefs. However, the main characters will require work beyond that. You shouldn’t limit their development simply to the confines of their culture. Just begin there. Start with culture, move on to religion, and then, ask what makes them unique and go from there. In my own world of Athron, the majority of the characters come from the same feudalistic society based largely on medieval Europe of Earth. There are exceptions, but that’s where I began.
Another critical component of world-building is the magic system. How detailed do you want this to be? Will it be as simple as a single magical talent like in Piers Anthony’s Xanth, or as complex as Brandon Sanderson’s Allomancy in Mistborn? In my world, magic entails an involved study with many different subfields. I began with the standard four elements that appear in a great deal of other literature—earth, wind, sea, and fire—and went on from there. I also have alchemy, and the study of runes as separate, but related disciplines. So, for example, a wizard might be skilled in flamecraft which gives him access to fire spells, but he also might know fire-based alchemy, and fire-based runes. A lot of this is actually crossover from my RPG development and it was intended that way.
So, to sum up, these are the essential elements of basic world-building for a fantasy world: geography, cultures and religions of the main characters, idiosyncrasies of the main characters, and last, but not least, the magic system. Start there and you are on your way.
And remember: you don’t want to befuddle the reader with too many details (I’ve seen that happen in other’s work, and it is something I’d personally like to avoid).