If you haven't been following, the game copies from several games, most notably Nintendo and Game Freak's Pokemon (but also Zelda, and several non-Nintendo games).
And when I say copied, they designed their monsters after the Nintendo IP directly [1,2,3]. Some are suggesting AI Pokemon generators were used given that the company has previously dabbled in generative art, though there isn't any evidence of this.
The mechanics of the game are obviously quite similar to Pokemon, except that Palworld adds guns and other unusual elements. But the similarities between their creatures and Nintendo's character designs are the most startling aspect of this.
[1] https://gamerant.com/palworld-pokemon-controversy-stolen-des...
[2] https://twitter.com/onion_mu/status/1748108600935919688
[3] https://twitter.com/Yoriden150/status/1748135297471127693