astle,
Castle on the hill,
Lines one and two, "Castle, castle on the hill somewhere close to the water mill," is telling that there had to be a source of water close to the castle so the people could have clean water. Line three,"Surrounded by its great big walls ," means the castle had either a wall or trees to protect them. The line about the knights went off to war, and the bloody battle is saying that there was a lot of wars around the castle over dumb things like cattle. This was a lullaby.