It entirely depends on the narrator
The answer will be determined by who the narrator is, and your ability to write very well.
First, every fiction invents new terminology. J. R. R. Tolkien invented 15,493 completely unique terms in his book The Lord of The Rings. "Downing Wall," "Elder Days," "The Fell Winter," "Valier," "Seeing Stones," "Ent," and so many more. In fantasy you are no stranger to inventing new terms and lands and races, using period-correct and region-correct language is handled exactly the same way; allow the context to explain the term. So here are some qualifiers that should guide your answer:
Yes, if your third person narrator is inside the fantasy world.
This is a narrator that maybe you need to use later within the story. Lemony Snicket occasionally interacts with the characters but is generally telling a 3POV narrative. Just remember that whatever "head" you are in as the narrator, that is the "head" your reader is in. So, is your reader literally inside your fantasy world? Then use correct language, like your reviewer commented about. Personally, I would consider a work to be low quality if I were immersed in 16th Century England and my narrator suddenly gave me,
She was floored by this comment. Yes, the dress had a bit too much fabric, and it zapped her when she touched the brass candelabra, but it's not like there was a one-stop shop for girls her size in downtown Knottingham Grove! She gathered up what remained of her pride, adjusted her bra, and trotted out of the room in a huff.
This to me is unreadable. Like Lukas said, it breaks the immersion. I would be instantly transported to my teenage daughter's high school prom, and any visions of dragons or knights or magic have just vanished. In fact, I disagree with Kuwaly on this point: I would spend more time in the dictionary with this than if you had used period-correct language. I would find that "one-stop," "bra," and "zap" didn't exist until the 20th century. For the rest of the book, my mind has only one thought: Who is this narrator who knows so much about modern earth? The story just died for me (and your reviewer).
But Kuwaly is not entirely wrong. If you are too literal in your period-correct language and you have done a poor job of storytelling, then people may spend a great deal of time looking up terms. Your job as the artist (fiction writing is an art), is to find the correct balance to connect to the reader and immerse them in your world. That is a talent you must develop; you can not just Google the answer to this. You will be taking a risk, and you will certainly have some readers who love it and other who lack the patience for it.
I write Steampunk, and this is where my work lives, and a sample of period-correct vernacular I have published is at the end of this post. I have created a custom dictionary for my word processor that will spell-check my paper, to be absolutely certain there are NO terms or idioms in my book which were created after the Victorian era. Words like "computer" or "bra" or "burp" show up as a spelling error. My readers LOVE being transported back in time this way. But Steampunk has a large following already, most of the work of conditioning the audience has already been done. Going back to Edwardian times or further, then the artist has many more challenges and you may want to look at the other options below.
No, if your narrator is from modern Earth.
If your story is from the POV of someone who has traveled to your world from modern earth (or perhaps has lived thousands of years and is telling this story today?), then definitely make the narrator use language consistent with that POV.
No, if your narrator is translating the tale from a foreign language
This is basically what Raskolnikov is suggesting. Let the reader know that your world has a very foreign language, and the narrator is interpreting the tale for the reader. Again, the narrator IS the reader. If your narrator is living today in 2022, use any and all modern terms in your translation. This is the easiest route, because you can speak incompletely familiar jargon, like saying,
"He was killed when a vrolmat came speeding by." (a vrolmat is how the Wulbermen get around, it's basically a car)"
No, if you are using 1st person POV
You already said this, but be aware that there may be occasions where the 1POV narrator is perhaps a time traveler or a traveler from Earth. One perfect example is the character Starlord in Marvel's Guardians of The Galaxy. He originates from 1980's America and tends to throw around a lot of period correct language. It has to be done well, and it has a lot of ways to go wrong. As you already experienced, an audience
Example - Period-correct Victorian steampunk, New terms introduced:
It happened when dad was assigned to a new airship in the Caribbean skies and as always we chose to move our home ourselves instead of carting everything up into an airship, as many Guard families do when they transfer. The desert was endless and mostly flat enough that we easily glided over the terrain. We needed to stay as low as possible to make good time, because the temperatures sometimes dropped below 800º in the hills. Dad said our horses’ turbines could stall at those low temperatures pulling so much weight. Trips like that would require the addition of two more horses, and that would cost quite a bit more for both the engines and in the nitre they would consume on our long trip. So we wound around the hills a bit, and this trip was sufficient time to endure a significant amount of father-son quality time. In Dad’s world, quality time usually means a science lesson.
“Look at that, kids!” said Dad, pointing excitedly out the window. “It’s a dust devil!”
“Ooooh! Cool!” responded my brother, craning his neck.
“Can I see it?” said I, from my seat into which I was lodged, strapped, and embedded like the naval of a sitting fat man.
“All right.” Mom said. She unfastened my prison methodically. She lifted me to the eisenglass and I peered through the pale amber haze at the face of a low precipice, where a crook turned the run of the ledge briefly toward us, and then bent away again to resume it’s parallel path, only a bit closer to our route. In that elbow I saw orange and brown dust dancing rhythmically in a twisting dervish. The dancer was so energetic and excited in its revolutions I thought it must have been the happiest dirt in the world. I saw the elbow of the ledge lacked the striations that ran the length of the face everywhere else, like a stage had been set for the performance. It was dancing in a smooth polished divot in the ground, which I assumed was what kept it from escaping its small platform no matter how ambitious it was in its turns.
“Isn’t that strange?” she inquired, kissing my cheek as she held me up and seemed to breathe a savory parcel of my youth, to store away as if it were a dear letter for use in reminiscing one day long off in her golden years.
I don't know if you like this style, but it reviewed well. I introduced my own term "nitre," and gave exposition that the world is extremely hot as well. I used no modern terminology at all to do this. The storytelling and context should have allowed you to understand that horses are machines, nitre is fuel, and eisenglass is a glass window. They "glided over the terrain" instead of "zipped" or "zoomed." Those modern terms would have destroyed your immersion into the story. Nitre never needs a definition, and I never give one at any point. You learn that horses run on steam turbines, and also, no where in the book do I ever detail how they work, or even how big they are. I am not writing a technical manual, I am telling a story. Good storytelling will allow you to put any unfamiliar language you want in front of your reader without making them stop to look it up.