Castles were originally similar to forts. Rulers established them to give their armies places to retreat, and to provide strategic watchtowers across the land. They were also used as seats of justice, storehouses for stockpiled provisions, and refuges for farmers who lived nearby and supported the castle by providing produce. Although the surrounding terrain factored greatly into the design, most castles shared common characteristics, such as the outer and inner walls, towers, the keep, and small shops and businesses located within the inner wall. The entries were frequently engineering marvels.
Cover the plywood sheet with brown or green felt. This will provide the platform for your castle.
Draw a floor plan of your castle on a large piece of poster board. Cut it out, and staple it down to the centre of the plywood board. Plan carefully, keeping in mind the kinds of material you have on hand and the scale of your castle.
Decorate cereal boxes and paper towel tubes to represent the outer walls and towers. Make sure to create the large main entrance, and also a "postern gate," a smaller rear entrance for foot traffic that did not need to pass through the main entrance. Finish the towers by creating crenelations or parapets around the top, or by fashioning paper cones to serve as roofs.
Use smaller cereal boxes and paper towel rolls to build the inner wall. Create small models for businesses such as a smithy, baker's oven, and market stalls to fit inside the inner wall. The main keep and a few prestigious homes might also be within the main circle. The outer circle might contain less prestigious homes, an inn, and other small businesses.
Glue or staple the various building parts to the castle floor plan. Add details to the entrances, such as a portcullis and a large door for the main entrance, and a barred door for the postern.
To create the moat, use paper clay to make a ridge around the castle. Crinkle tissue paper and glue it around the castle for the appearance of water. Add a drawbridge at the main entrance, and either a small footbridge for the postern or a footpath from it to the main entrance. Use bits of sea sponge on toothpicks to represent bushes or small trees.
Check a good book on castles out of your public library. It will help you with creating your floor plan.