I'll refrain from commenting on magic, because I'll admit anything I say about it will be slanted towards trying to make Shapeshifting into a viable and possible form of magic.
As for the justification of the medieval stasis/Anachronism, I'll try to explain how I see it using what I've been told so far.
Weapons technology has not gone in the favor of personal firearms simple due to the complexity of guns. While I would not say that making a sword is any simpler, a gun, even one like a musket, is made of multiple parts of varying levels of strength and quality. The reason this is important is due to enchanting: as enchanting is preformed using written runes, it was easier to inscribe runes onto such things as swords, armor, and occasionally arrows than onto guns and bullets. Additionally as I was also told, the price for firearms are high due to the rarity of Saltpeter, a vital component in gunpowder. Locations where they can be found are few and far in between, and most of it is used for heavier siege weaponry meant for monsters instead of individuals. The rarity of gunpowder, in addition to the recent years being "peaceful" in that there has been no real demand in new weaponry, made gun research a niche subject at best, otherwise those who look more into it are seen the same way Yama is with her magic: power hunger warmongers.
As for the heighten advancement in steam engines and other technologies, I'm going to use the wild monsters in the frontier to justify most of it. While I wouldn't be so idealistic as to say that all sentience live in peace with one another and thus never thought to turn their creations against each other, there was a much larger threat looming at their borders. That's not to say that there hasn't been the occasional scuffle which may have made someone thing "How could I use this against those people?", but they typically get drowned out by the voices of those who say "How can we use this against those monsters?". Hence the advancement of steam-powered airships and locomotives: At this point in history the only thing that has enough power to slay monsters are a combination of powerful magic and manpower, both things which takes years to amass. In the interim the world grows steadily, and if it wishes to do so they need to formulate ways to traverse their world safely. First were trains: Fast than any beast and clad in iron, only the largest and most powerful of monsters could stand a chance of stopping a train running full tilt, and as massive metal machines with cannons attached to them, there were very few monsters who could do such a thing. Airships simply relied on the fact that most of those same monsters are incapable of flight, and the ones who do are not quite as durable as the airships (If you cripple a bird's wing it's as good as dead, whereas you can put holes through an airship but could still stay fly). Thus the demand for faster, tougher airships to avoid monsters overtook the need to actually destroy them. Or rather, that's what's happening first: I would hope to think that scientific progress is occurring in all fields, and it's simply that the current culture looks badly upon those who research into things with obviously militaristic capabilities.
As for the monsters themselves, I doubt they're governed in any meaningful way but they could simply be uber-powerful wild animals, some with sentient level intelligence combined with their monstrous strength. Most commonly seen within dragon type creatures, but more on that later. Point is the reason we haven't utterly steamed rolled over these monsters is because currently they have more power available than the current civilizations do, namely in mobility. The monsters don't require trains or weapons to do great damage, whereas we do. We have to slowly expand inch by inch from the safety of our walls and weapons where the monsters are capable of moving freely and wherever they need to. Now what keeps the monsters in check are themselves: There's no reason to think that they are all unified to destroy all sentient lifeforms. At worse they simply attack whoever they feel they're capable of destroying to take resources they would need. A monster may attack a settlement, not because of sick pleasure, but because there are things in that settlement that it can eat to survive. That's not to say that all the monsters have only animistic intelligence, but hardly all the monsters actually have any desire to see our world destroyed.
And of course, there are always exceptions to the rule. Such as monsters who are fully capable of sentience and find our civilizations to be a blight on their world. Or whatever justification they think. Point is, it is these monsters who intentionally make it hard for civilization to expand and advance into the wilds, and why we even have things like Old Ruins to explore. It's a balance of power, but again, it's slated towards the monsters. While civilizations have immense power within their lands, monsters have constant power everywhere else, and when guided by a sentient monster they are much more capable of organizing themselves to counteract the raw firepower most civilizations can put out.
I'd say that currently there may be a sort of cold war or even monster civil war around this time that explains the recent "Peace". Both sides, monsters and civilization, are at a state where they both are capable of a mutually ensured destruction, and must slowly edge themselves into an adventitious position before they can make a full out attack on one another. Attempting to do something preemptively will have unpredictable results, and while the occasional incident between individual monsters and mortals are ignorable, mobilizing entire armies will cause the other to react in kind.
Alternatively if the idea that civilizations can even have that level of warfare against monsters, then another idea I had was simply that there are a lot of monsters out in the world, and all of them want to be the boss. Thus they're currently involved in their own wars against one another to attain dominance, largely ignoring civilizations as a situational threat at best. They know that our civilizations won't venture out into monster lands, so they're more occupied in deciding who calls the shots. And should some civilization try to take advantage of the monster civil war, they'd find that they're still very much a threat even when fighting each other.
And lastly, if I may take a more darker and somewhat controversial route, another explanation for why we had such strange technology developments can be explained with my favorite reason: The Suppression of Knowledge. It could be anyone: The academy of magic, whatever is the most dominate religious, druids of the wilds, Luddites who simply hate the idea of science, or even the local government trying to control their people by contorting what they know. A militia, and by proxy a terrorist organization, can be formed quite easily if the only thing they need to be a threat is the ability to aim and shoot a gun. Thus guns are suppressed so that anyone who would be able to post a military threat must go through the complicated and long process of traditional martial training, and those who still want to use firearms would have to purchase the materials, which can be tracked. The advancement of transportation technology can also be explained using a similar, if somewhat more benevolent reason. If civilizations are capable of emulating the power and mobility of the monsters they face, than they can start building towards expanding their lands in such a way that isn't so costly in both manpower and materials. If a handful of airplanes could be used to take out a giant monster instead of an army of soldiers, than that's what people should be focusing more on than trying to make a bigger handgun or looking into making magic less costly.
Oh, and one last thing that I think was also mentioned: The gods themselves may just be intervening. I think Pinkerton said something about trying to look deeper into the power of magic is liable to get their attention and smite the interloper? Something similar to that, but with technology. So it would sort of fit with the above hypothetical, but in that regard it's much harder for civilizations to develop. After all, unless they can kill gods, there isn't really a way for them to do anything that doesn't result in them getting slapped down with a big no.