Okay, let me preface this by saying I love the Fable series so much that I have a Hobbe tattoo (it's hard to explain, but he's a doodle Hobbe from Fable II's collector's edition guide's artbook). His name is Maxely for all those in the know. xD
I loved the first Fable as well as Lost Chapters. It had such a neat feel and the humor was on point.
Fable II gave me more of what I wanted (character customization, more open-endedness, a beautiful stylistic world with colors outside of brown, even more humor, interesting quests in a world that wasn't just a Tolkien rip off).
Fable III, put everything I loved in the first games into a much more interesting package.
The humor is more memorable (Hollows and Hobbes, BALLS!, Reaver's Mansion party). It did emotion in a much more subtle way (cliche or not, they finally got what subtle is). It took an outstanding idea from the Banshee in two and gave it to the Darkness (the whispers, although I did miss the more personal attacks of the Banshee).
It improved a lot as well. I found the Sanctuary to be quite wonderful (visual pause menu was a lovely idea and implemented well in my opinion). I found the story much more appealing and I enjoyed the characters more (even Reaver was delightfully charming, but I'm sure Stephen Fry was mostly to be applauded for that). I liked that morality was played up (in the story morality was great, but as a mechanic it's still a bit stupid). Spell weaving is neat.
It also has one of the best voice acting casts I've ever heard.
Then there was that little thing that gamers complain about, but no one ever notices in Fable III, the ability to actually change the world drastically. Your decisions really dictate how Albion changes and you can visit those changes (and even get quests solely when you make those changes). SPOILER. When you drain Bower Lake to create a mine, you don't just hear about it rumors, you can visit the mine and talk to the miners. You can even drag new miners to work. SPOILER END. Even some of the smaller decisions made as King/Queen were interesting (although didn't really change a whole lot in the world).
I might have forgotten things, but this is a list of reasons why I love Fable III.
Also, I don't think it's a perfect game. It made some bad changes (the dog feels a bit more useless, the spells have been dumbed down again, awkward pauses for free-roaming, the Leadership role was horribly paced, some story line head scratchers, forced Promises and lack of major middle ground, horrible conversation/relationship system, families were lacking a lot) and has issues/bugs (albeit I've never seen a major glitch that had me resetting or starting a new character). But not enough to feel less than Fable II.
I think the idea that it needs to be more streamlined keeps getting taken way to far, but I still enjoy the games of the series, each more than the last.
EDIT: I also prefer Fable III's repressed feel to Fable I and II's idyllic fantasy world feels.
Something about this post's writing makes me feel awkward. Not sure what or why, but it's just strange.