When you're buddy-buddy with the master of a country, you are rewarded splendidly. Why? Because this is a monarchy where being buddies with the master is a very advantageous thing!
This is a jukugo word, which usually means on'yomi readings from the kanji. If you know the readings of your kanji you'll know how to read this as well.
This town was once a monarchy.
A monarchy is a country where the leader is a king or queen.
Denmark is a monarchy.