One use for fantasy is wish-fulfillment. With that in mind, why is there a need for realism in creating a character in a fantasy novel?
There's a thread of misogyny running through this question and some of the comments (by the OP) that I find off-putting. OP, if you're coming off a bad break-up, your bitterness is somewhat understandable, but that doesn't make it appropriate.
And it isn't a good idea to let it carry over into your writing, not if you want the story to be enjoyed by anyone but other misogynists. (I realize that this is a pretty harsh charge to make based on the little I've seen of you, and I could be totally wrong. if I am, I apologize, but I'm going to write the rest of this post based on what I've seen of you so far).
Identifying with characters is what makes fantasy more than a collection of silly imaginary monsters. Readers might be drawn to a story by its setting, but they stick around for the quest, to see the protagonists working toward their goals. If readers don't care about the protagonists -- if their emotions are so foreign that there is no recognition, no concern for their wellbeing, then readers have nothing to care about. You see it in SciFi, as well, where robots and other creatures that SHOULD be completely interchangeable and bland are given quirks and personalities and even emotions to allow the reader/viewer to identify with them. Connecting characters to some aspect of humanity is what makes them interesting to the reader.
Now, back to the misogyny! Because I notice that you aren't asking why you need to make your 'characters' realistic. No, you're focusing in on why you need to bother making the pesky wimen-folks seem like human beings. Obviously, the reasons are the same. Female characters are characters first, female second. Being female is one aspect of their characterization that you work with, just like you work with all the others. If you aren't able, for whatever reason, to write realistic female characters, maybe you should set your work in a land with only men. Enjoy.
None of this is to say that fictional characters aren't often larger-than-life. 'Realistic' isn't the same as 'real'. But you've got to keep it within certain limits in order to give readers something to hold onto.
I think it depends if you are after wish-fulfillment or a complex story.
In the realm of wish-fulfillment, there is absolutely no need to have realism. Girls (or characters) can come up to you and offer to grant you your wildest dreams for not reason in particular. The most desirable boy in school can fall madly in love with you (okay, the school wallflower) because he thinks your blood smells good. You get the idea.
But if we're talking a fantasy novel, all fantasy is rooted in reality somewhere. You'll note that countries, cultures, customs tend to be based on existing (or extinct) ones from our world. Even when you have otherworldly races, authors still draw on cultural values from this world. Although you can have a world where the sky is orange with green polka dots and cheese grows on trees, it's a surefire way to turn off readers. They expect elements of familiarity. They expect cows to moo, gravity to exist, chairs to be used for sitting on. If in your world, cows actually bark, and there's no good reason for it, it's jarring and distracts from what should be the main focus, which is your story.
The same applies for characters. It's just as jarring if a character acts in a way that no normal person would act. You would never go up to someone you've never met in your life and offer to be their servant out of the kindness of your heart, for example. Why should a person in another (albeit fantastical) world do that? Just as we expect consistency in small things like cows, we expect the same of people. People are short-tempered, jealous, selfish, impatient, depressed, discontent, malicious; they're flawed. And if they act a certain way in reality, we expect them to act the same in fantasy. Unless, of course, there is a good plot reason for it.
The other point here is that a lot of the time, it's the tension and interactions between such flawed people that drives a plot. What plot is there when all your characters are perfect?
All stories are lies the participants conspire in, as opposed to the more harmful type where the liar tries to pass fakery off as the real thing leaving the recipient unaware. Stories are a currency whose only validity is verisimilitude and raw emotional appeal.
What a storyteller does is to agree with the audience to tell a lie. Implicit in that contract is the idea that the lie will be of a quality that means that the audience may even believe the lie despite that they know its true nature. What the audience gets out of this is comfort, or inspiration, or hope. What the storyteller gets out of it is their own business and it varies, although possibly not as much as many would like to pretend.
In the Sci-Fi sitcom Red Dwarf liars Rob Grant and Doug Naylor invented a lie called Better Than Life, it was a game that allowed you to travel in your mind into a completely believable fantasy world in which all your desires were taken care of, the problem being that it killed you. You would become so addicted to this perfect reality that you would never come out to eat or drink, you would never look at objective reality again. These technological lotus eaters would slowly expire of starvation, dissolving in their own filth.
The way the game achieved its pernicious goal was to hide from you. Early models were transparent. They would give you supermodels, ice-cream buffets and palaces of gold, they were the worst of all things, a novelty. So the developers went back and created a new version. You didn't get ostentatious, gaudy and basic wish-fulfillment, the game would burrow into your soul, find your true desires and then pitch them to you in a way that seemed convenient but entirely plausible. If you wanted to identify the fakery you could, the bait and switch is that you never did.
What Grant Naylor was collectively pitching was the idea of the perfect story. A story so satisfying, yet so plausible, that the audience would prefer it to any objective reality. The problem is, it's a sliding scale, the more immediately satisfying something appears to be, the less plausible it seems, because the human condition, as Buddha remarked, is to suffer. On the other hand, the more plausible something seems the less satisfying it is doomed to be. Being a successful liar is all about balancing satisfaction and plausibility in this way.
The idea of lying to yourself in such a delusional manner, daydreaming, is seen as an inevitable but essentially pointless human occupation. The problem comes when people can no longer see reality because of their daydreams, or when they actually try to resolve their daydream into reality, imposing it in any way on others.
The need for verisimilitude caters to the natural cynic in all human beings, if you are a story teller you must defeat this monster that guards the payload of the audience's trust and confidence. Trust and confidence are precious commodities, that's why they need guarding. To discard the mechanisms of palliating the cynicism is just to turn yourself into something no liar wants to be: bad at lying.
To me, this question confuses what "realistic" means when it comes to characters in fantasy.
Characters should be realistic in the sense that they're realistic for the story itself, not necessarily realistic because they conform to our known norms, cultures or behaviours.
In my mind, what readers look for beyond familiarity is consistency, where the events that happen are consistent with the laws of that universe for that particular world, and the people/aliens/creatures involved fit into that universe.
They may not be realistic in this universe, but they better be realistic in theirs.
You don't have to make a character realistic, but you do have to be careful how you make a character unrealistic if you choose to do so. There are plenty of examples of unrealistic stock characters. A 'manic pixie dream girl' is one example of an unrealistic wish-fulfilment character that's relatively common in fiction: she's beautiful, playful, and adores the hero for no apparent reason (because he's so wonderful). She's completely unburdened by family, obligation, or interest that doesn't involve the hero. Her entire purpose is to help the hero find happiness.
The problem is that if you aren't careful, any unrealistic character (especially of the wish-fulfillment variety) can make your story tired, clichéd, and boring. If you're writing for yourself, that's fine. If you're writing for an audience, not so much.
Realism is just another style, fiction is never reality. With that said, unrealistic characters can make it harder to suspend disbelief, identify with the characters or care about them, regardless of genre. If you are discarding realism, you need to have a good reason.
Most adults don't find characters and plots that are pure wish-fulfillment to be very interesting or compelling. We can all create our own wish-fulfillment fantasies if that's all we're looking for in a book or a story. The dominant impression when you read something like that is that the author is writing just for his own satisfaction.
Their physical characteristics don't have to be realistic, their personality has. You could make one of your characters a sentient levitating purple molibnenum tetrahedron, as long as its personality is consistent. If it's a Deadpan Snarker, keep it that way, or maybe make it slowly lose its sense of humor due to some believable cause, like a personal tragedy. If it's a stern, humorless authority figure, don't make it just start cracking fart jokes out of the blue.
The “Fantasy” genre is stories that are “fantastical” — not stories that are unrealistic wish-fulfillment. If I write a book where the main character is a total loser who wins the lottery and travels the world dating the most beautiful people, that is not a “Fantasy” genre book. That story has wish-fulfillment but it is not fantastical.
If the characters are not realistic then we won’t care about them. If we don’t care about them character, why would we read a story about them?
If you look through any genre, the standout stories are always the ones where the characters are real people that we can relate to and fall in love with and learn from. The worst stories are always populated by cardboard cutouts that we can’t understand and forget about immediately.
All stories are morality plays. That is, they all deal with moral questions and moral choices. They may express very different moral viewpoints, but to make a satisfying story, they have to speak to the moral concerns, beliefs, or experiences of real readers.
Because stories are fundamentally moral in character, you are free to change the settings and the physical rules of the universe in order to create a stage in which you can contrive a particular morality play. Thus you can come up with just about any physical characteristics you like in a character, but you have to give them a recognizable human moral character.
In fact, the moral character of fantasy characters often tends to be very clear and simple. Think of LOTR or Harry Potter or Star Trek. Their worlds are fantastical but the morality is very straightforward, and the stories are often quite on-the-nose morality plays. Certainly that is not universally true, but I think it is demonstrably true of the most popular examples of the genre.
So, you don't need physical realism, because stories are not about the physical -- that is merely set dressing. But you need moral realism, because stories are always moral at their core.