The biggest difference on this particular case seems to be Palworld doing big numbers, (both in sales and audience) unlike most other monster catching games.

So, Pokemon clones are allowed to exist as long as they don't DARE challenge Pokemon Company's utter dominance?

There's loads of mon-catching games that exist unmolested, though? There was a time you couldn't go on the Pokemon reddit without a slew of fed-up fans plugging all the Pokemon-style indie games that do x or y better than Game Freak. Not to mention the old guard like Digimon, DQ Monsters, Monster Rancher…