With MAJESTY: White unicorn pony with blue mane and tail (white streak in mane) and glittering blue flowers symbol
Thanks to Garej for the above Argos catalogue scan of the castle.
Dream Castle was the playset most children dreamed about when they were small. In the form of a big pink and blue castle, it was basically ponyland's magical palace, home of the 'Queen' pony Majesty and her baby dragon attendant, Spike.
In the United Kingdom particularly, Majesty became a major focal point for stories. She was the wise Queen who always knew what to do -and she had magic powers to help her, such as invisibility shoes and a magical mirror. Dream Castle came with both shoes and a mirror, plus a pulley mechanism to drag up the basket for Spike, a jewel box, a throne and more. The brush shown in the above picture is yellow, but Dream Castle was sold with either a yellow or a blue brush depending on when you bought it - early editions had yellow and later ones (like my own), blue.
Majesty was never so important in the US ponylore as she was in the UK, and she never appeared in the cartoon series. Like most unicorns of her generation, she had a glittered symbol and a streak of a different colour in her mane. However, to mark her out as special, she also had the first damsel hat and crown that ponyland had to offer - an idea which would be later replicated in more style for the Princess Ponies.
Spike and Majesty both had several Mail Order releases in the US and Canada, though the Mail Order version of Spike had bigger eyes and not the slit eyes of the Castle edition.
Dream Castle also had a remodel and a lavender rerelease in North America some time during the late 1980s. This was never sold in the UK.