Hello!
Like so many other fantasy themes, the flying island/castle/city thing was played with a bit in the old BD&D world of Mystara. There, these items tended to be concentrated in Alphatia, a
highly magical empire with a historical specialty in air magics.
The kingdom of Floating Ar consisted of flying islands drifting over a section of the Alphatian continent. BD&D allowed for ascension to immortality (BD&D godhood) as a goal for high-level characters, and a king of Floating Ar enchanted the islands to "transform his land" as part of one pathway to immortality. It saved many of his people, too - when the Alphatian continent was sunk during the massive conflict of empires known as the "Wrath of the Immortals", the islands remained, floating above the sea.
The Imperial house of Alphatia also had access to at least one flying castle, which got used in the module M2,
Vengeance of Alphaks.
And the flying city of Serraine was introduced in the second "Creature Crucible" supplement, PC2,
Top Ballista. A gathering spot of sorts for flying races, the city itself flies through the use of ancient Blackmoor-era artifacts, maintained by the gnomes who mostly run the city.
The area of Mystara known as the "Hollow World" also has flying islands and even small continents, orbiting slowly between the eternal red inner sun and the world's surface, giving the lands they pass over some shade from the endless day.
As to appeal, flying cities have all the comforts of civilization, plus aerial mobility. What's not to like?

Flying castles are like the ultimate mobile home; with enough fortification, they come to resemble the capital starships of a space-opera campaign, city-destroyers capable of bombarding with boulders, fire-pots, and spells, and assaulting with
feather falling airborne units. The flying castle in module M2 was used in just such a role. The prospect of owning such a toy, or even commanding it for the duration of a battle, should warm the heart of all our inner munchkins...
Hope this helps!