1) Think of something(s) cool. Your fantasy world needs distinctive features that tell the readers what world they are in, and give you something unique and interesting to write about. Otherwise you'll just wind up with McFantasyLand. By putting this FIRST, you increase the chance of creating a truly memorable world and make it possible to weave its uniquities throughout instead of grafting them on as afterthoughts. (You can also build from the very basics up, but then you have to work harder to extrapolate interesting details out of the terrain and lifeforms: easier in science fiction.)
... * Then ask: "Why is this cool thing here in this fantasy setting? How did it develop? Why is it like this instead of some other way?" That's your foundation. If it's not solid, it will rock underfoot and your readers will leap off.
... * Also ask: "What is this for? What does it do in a fantasy world?" This is the functional purpose that moves your cool thing in a plotward direction. You can take all kinds of mundane stuff in our world and imagine a way to give it mystical properties through its inherent nature. That should give you a good idea what it will do and why and how.
If you want a purple rhinoceros, you can have one: but it needs a reason for being purple, and it needs to matter once it exists. Maybe your dragons can only see wavelengths from red through green, and the a lot of the megafauna is now blue or purple. But then a mutation occurs...
2) Think of some ground rules, your world's version of natural laws. They don't have to be the same as our world's laws, but they should be internally consistent. Fantasy isn't a "get out of sense free" card.
... * Ask yourself: "Why is this law like this?" Frex, it might have been established by a deity as an experiment, a bet, or a piece of art. It might have evolved naturally and still be evolving.
... * Ask yourself: "What effects will this law have?" A world's parameters shape its geology, its flora and fauna, and its sentient culture(s) if any. These are pretty good ways to make your world not only unique and interesting, but full of inspiring problems that are fun to watch from a safe distance.
Suppose magic makes everything buoyant. Gravity becomes optional; all magical creatures such as dragons, unicorns, etc. can fly whether or not they are aerodynamic. But you decide that evolution also applies, so over time creatures are getting more magical and more buoyant ... and maybe after a while they have a hard time staying on the ground even if they want to. That might be a problem. Particularly if your purple rhinoceri have magic.
3) Flesh out the general features of the world, or at least the part(s) you plan to use. Fill in details like continents, mountains, oceans, trees, animals, major crops, civilizations, towns, religions, etc.
... * Ask yourself: "How did these things come about? Did they develop naturally or were they planned? Who controls them?"
... * Ask yourself: "How does this setting influence the characters who live here? What are their lives like?"
If the purple rhinoceri migrate seasonally, spring and autumn fashions may include large bell-shaped umbrellas. Since these make it harder to identify people carrying them, the crime rate spikes, and you don't really want to lift your umbrella to see the perpetrator because there might be a rhinoceros overhead.
4) Throw in some complications. Every world and culture have parts that suck. These will give you more plot ideas. To keep yourself interested, it's okay to feature some social, moral, or other issues that you care about. Just remember to plant them under the story, not on top of it, to keep your readers interested.
... * Ask yourself: "Who is hated? Who is mocked? Who is ignored? Who got wiped out? Who has wealth/power and who doesn't?"
... * Ask yourself: "How does that affect people's lives? Are they mostly content with the status quo? Are they considering a riot? Is the society just one staggering riot after another?"
Meanwhile, some people have decided to make a living by hunting the flying purple rhinoceri for their meat, colorful armored hide, and magically powerful toenails. The dragon herders, however, are having a hard time keeping the population of dragons stable, which means the supply of gold from dragon eggshells is getting erratic, which is a threat to the economy. And those two groups of people hate each other, so when the mutant purple-viewing dragon stoops on the rhinoceros herd and the rhinoceros hunters start shooting at it, much cultural mayhem will ensue.
Here are some good resources for fantasy worldbuilding, especially the fleshing out part:
"Fantasy Worldbuilding Questions"
If you're not sure where to get ideas for cool stuff, I recommend mythology, history, the news, and interpersonal drama. Pick an idea and transpose it into a fantasy context, then develop its magical aspects. Frex, in Buffy the Vampire Slayer, Joss Whedon took the idea of "boyfriend turns into a jerk after having sex" and gave us a scene where the vampire boyfriend loses his soul and actually turns demonic and evil. Here are some resources:
Best of History Websites
Folklore and Mythology Electronic Texts
Popular Interpersonal Drama Books
Psychological Problems and Disorders
Top 10 Lists