It's a disappointing government, this is for certain, especially given that every military unit beyond that which your cities support costs three gold per turn. Though there's little reason to actually like it, the main idea behind it is that it's the only government that's "free." In other words, you have to "waste" time and/or resources to get any other government type, be it Republic, Democracy, Communism or Fascism. They are non-compulsory advances like Music Theory, Free Artistry, or Ironclads. So, if you've not bothered to switch from Despotism when just entering the Middle Ages, there is actually something you can adopt as your government and stop getting hit with the production penalty of Despotism.
I still think it wouldn't be unbalancing if the extra unit costs were like Republic (cost 2 gold), but that's just me...
- Rep.