An enlightened despot is an authoritarian leader who exercises rationality and, in some cases, tolerance. While authoritarian leadership is inherently repressive in some ways, this does not mean that the leader cannot exercise tolerance in other areas.
Authoritarianism and cruel governance are often viewed as tied together, and there is a correlation. However, some despots and monarchs have improved the lives of their citizens, and many allow free religion and some degree of free speech. The "enlightened" portion of the term refers to the Enlightenment period in Europe, but it has been retroactively applied to a number of historic leaders as well.