From Benford's Gilbert and Sullivan Lexicon:
When Patience completed its run at the Savoy, the triumvirate was ready with another delightful opera, Iolanthe, in which we find members of the House of Lords brought into conflict with a lovely company of fairies, led by a buxom fairy queen dressed and accoutered remarkably like Wagner's Brünnhilde. Iolanthe opened at the Savoy on November 25, 1882, and had a relatively modest run of 398 performances.
In the following year Sullivan was knighted -- not for his highly popular comic operas, but for his serious cantatas and other massive choral works that had won him much fame, but little cash. Under a profit-sharing agreement Gilbert, Sullivan, and Carte had become wealthy through their comic operas; but Sullivan now began to feel dissatisfied. He was convinced that he was meant for bigger things. He also began to resent some of Gilbert's less-than-diplomatic remarks. (The two were never close friends.) Gilbert made matters worse by proposing for their next opera the so-called lozenge plot, in which a magic pill or potion somehow effects major changes in everyone's character. Sullivan bridled at the artificiality of such make-believe and asked Gilbert to try to suggest something more believable and true to life. Iolanthe was Gilbert's compromise. Aside from the fairies, the characters in Iolanthe are fairly true to life, and once you accept fairies, their magic powers make all else believable. Nevertheless, The happy collaboration was beginning to show signs of impending rupture.