"Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time...."
It means the variation in monarchy is higher. So the best monarchy is better than the best democracy, but the worst monarchy is worse than the worst democracy
It also paints Charles in quite a good light. I assume that she wrote to please, but it also sounds like he was a genuinely good king.
I have heard that the best form of government is an absolute monarchy, and the worst form of government is an absolute monarchy.