Castle Greyskull was an ancient fortress meant to house and protect an even more ancient power from Eternia's past; a power that was meant to be held in reserve for the dark times ahead; Castle Greyskull looks the way it does on purpose- it's supposed to look so frightening that "no one except the bravest of souls would ever dare enter."

Also, I'm pretty sure My Little Pony had the copyright on froo-froo looking castles in the 80s.