Because there is no such thing as "floating swamp castles". Malbork, the largest Medieval castle in the world, is built upon a swamp. In order for it to not immediately start sinking, the builders had to place the foundations upon hundreds of pillars made out of massive, ancient oaks, since those don't rot in contact with water and moisture - quite the opposite, they become harder. It's currently calculated that those pillars are worth many times more in monetary value than the castle itself. So no, Greywater Watch is not some reference to something realistic, or even semi-serious. It is, quite literally, "Howland's Floating Castle", a thing of pure magic and fantasy.
And I must disagree, the books are not ambiguous about the nature of magic. Among clearly fantastical elements we have: flaming swords and similar manipulations of flame; enchanting weapons; resurrections; telepathy and telekinesis; dragons who can actually fly and breathe fire; prophecies; warging (and wargs themselves); necromancy; the undead; fae; giants; glamours and other illusions; shapechanging. And those are only examples I can recall immediately, without delving into the books in any detail. I'm sorry, but that series has lost any claims to being "low fantasy" a long, long time ago.
As an aside, that term is most often used erroneously. "Low fantasy" simply means a place where magic is not a "natural", innate part of the world, with its own rules and laws; it's an intruder, in other words. The opposite is "high fantasy". Those terms have nothing to do with "how much magic is there", so I'm using it here as a shorthand.