As long as I'm ALLOWED to write about them or krakens im ok!
I was told to limit the monsters to things that are bordering on the realistic side. Which I agree with but what's purpose of writing a roleplay if you're not going to roleplay it to the max.
So basically, as long as it's tasteful and well-written it's in bounds?
I would add that if its Dwilight, I would encourage bordering on the realistic side more than one would so on other continents. And I would encourage not going full-bore with crazy monsters, but that being said, more roleplay elaborating monster details is great!
I guess my emphasis would be 'scale'; some monsters are more plentiful than others. As Zakky said, not every monster is a fire-breathing dragon, the Loch Ness Nellie (or maybe Lucian's Lake's Lillian), or a Thunderbird. But there might be a bunch of chupacabras, jackalopes, griffons, ants that leave an acidic slime behind them, giant slugs or other giant small creatures, sasquatch, and other more plentiful creatures. Generally, keep it in the milieu, but add creativity to the environment. Or rely on 'ignorance of the medieval mind'. They may have *thought* they saw some crazy monster, but that's because 'crazy monster' is only how they knew to explain the unknown stuff. It was really Great Great Aunt Bertha farting in the woods after eating her chili for a week. I think there is plenty of room for roleplay between the reality of a situation and how our characters (or our NPCs) interpret it. A staffmember comes back from scouting some woods trembling with tales of horned cats, but maybe he was so started, they were really only a normal buck starting to grow their antlers, not the cat-rhinos the scout saw.
Short answer, yes, as long as its tasteful and in-bounds, you should be fine.
And some of these monstrous legends may be nice to add to region descriptions.