I don’t think you can classify Medieval fantasy as generic – they’re not and there’s no such thing as a generic setting because they’re all unique in their own way.  I think what you might be trying to articulate is that they seem mundane but that’s more a product of where you’re from than anything the settings themselves have to offer.  Medieval Europe is, for most of us, our history;  it’s what we know and sometimes it doesn’t seem all that interesting or exciting.  Arabian Nights or tales of the Orient seem very exotic and exciting to us simply because they’re strange and foreign and for most of us largely unexplored parts of history and geography.  But I guarantee you that if you lived in somewhere like Turkey (as the only arab country I can think of that wouldn’t consider D&D to be some kind of devil worship) or Japan, Medieval Europe probably seems very exotic, foreign and exciting whereas Arabian Nights might seem more mundane.  I think we do our own history a disservice if we simply describe it, ir things inspired by it, as “generic”.

It’s a little bit like when I watch game of thrones and everyone has British accents, and not just English, regional accents.  There Yorkshire and Lancashire for the Northmen, a mixture of Northern England and Scottish for the wildlings.  There’s even people with Geordie accents in there.  To me that doesn’t really seem so exciting because living in the north of England that’s what I hear every day.  But to someone in the USA those accents that step away from the more commonly exported BBC ENGLISH (what’s referred to here as “received pronunciation”), they seem quite exotic and foreign and were used precisely for that reason

That said I do think that Forgotten Realms is a little bland but it’s that way for a reason – it’s basically like the McDonald’s of RPG settings. It’s designed for mass appeal and deliberately plays it safe. It shies away from difficult themes and is designed using a fairly modern, Western lense in terms of the cultures and social attitudes presented in the setting. It’s not everyone’s cup of tea, it’s not particularly challenging but it is a very good place to start playing RPGs because it’s fairly light and quite easy to relate to.

With that in mind I don’t really think that including Al Qadim is likely to do anything to the game beyond expanding the boundaries of the supported world making it easier to move your games to a wider variety of sub-settings within the parent Forgotten Realms world – not a bad thing but also not exactly ground breaking.  I do agree with @horati0nosebl0wer about not bending the knee to pressure groups not because I always disagree with the pressure groups views (although in most cases I do) it’s simply that Internet outrage mobs, irrespective of their political leanings, are usually very small and geographically disparate minorities whose voices are artificially amplified by the fact that the Internet allows them to congregate together, virtually, and shout at the same time. The majority of people are usually silent on such matters and, rather than being outraged, will simply take their business elsewhere, without much complaint, if they don’t like the product you produce (hence the rise of the phrase “Get Woke Go Broke”, which is really just the description of market forces reacting to the silent majority). But, I definitely don’t think this is an attempt by Wizards of the Coast to “Get Woke” (some would argue they already are) even if Comicbook.com might try to spin it that way (they do have a tendency to lean more than a little to the progressive left). In my opinion this is nothing more sinister than WotC offering a wider range if options for playing D&D – something I think they have to do to stay relevant and interesting because the RPG market is actually quite competitive now. There’s lots of Indy games out there that offer a huge range of settings and that are more mechanically sound and exciting than D&D and they cover a wide range of settings. D&D has to continue to provide more variety simply to keep its current business, let alone try and win business form the competing games.  So to me this seems more like a business move than some kind of progressive agenda.  And honestly, even if this was some weird kind of diversity and inclusion move, the net effect of it is still going to be that there could be Oriental, Arabian and African locations available in D&D, which is still a good thing.  Remember that just because the motivation behind something isn’t always to your liking, that doesn’t mean that the out turn of that won’t be.