Also known as The CastleBrary, the Friendship Castle, the Crystal Castle, Ponyville Castle, "the TreeCastleCrystalBrary," Twilight's Castle, or the Tree Castle.
The palace spontaneously manifested on the outskirts of Ponyville after the Elements of Harmony were restored the the Tree of Harmony. Princess Twilight Sparkle claimed the castle, as the Golden Oak Library (the Treebrary) was destroyed in her battle with Tirek.
The CastleBrary is a large, crystal and stone structure similar to the Day Palace in Canterlot, although not as sprawling or grand. Like the tree it superficially resembles, its layout seems to be based on fractal patterns, creating a maze-like network of interconnecting corridors, with chambers being formed in the empty spaces between "branches" and "trunks." During the day, the palace is brightened by daylight filtering through its crystalline structure. At night, the palace is lit by torches and ever-glowing gems, creating a soothing ambiance. While beautiful to look at, the hard surfaces can create harsh echoes and are often uncomfortably cold, which Twilight and Rarity have been attempting to rectify by the generous placement of cushions and tapestries.
The layout is still not entirely known: the peculiar magic that created the palace seems to cause its internal arrangement to shift periodically, and areas come into and go out of existence "when nopony's looking." So far this has not proved dangerous, but it can be confusing and disconcerting.
Council Chamber/Chamber of Friendship/Throne Room
This large chamber contains six stone thrones, each with an emblem matching the cutiemarks of the mane six, with a smaller "side-throne" attached to Twilight's which seems to be for Spike. Although originally in a simple circle arrangement, after a short time of castle occupation the castle's magic caused the room to shift, and an enchanted map of Equestria on a large round stone table formed in the center of the chamber. This map seems to locate "trouble spots" in Equestria in which the magic of friendship is required.
An enormous chandelier made from the roots of the Golden Oak Library, adorned with gems depicting memorable moments of Twilight Sparkle's time in Ponyville, lights this chamber.
This is a large chamber with ample dining tables and an enormous fireplace.
There are three stable kitchens. There may be more undiscovered ones.
There is one large vegetable garden for cultivating crops, and several decorative gardens, including one that holds the sapling growing from the cutting Applejack rescued from the Golden Oak Library. There are also some herb gardens, one of which has been claimed by Spike.
Mini's Play Room
A multiverse experiment, done by Princess Twilight, led to the creation of living, sentient figurines of every pony in Ponyville. After being gathered up, Twilight converted a conference room into a playroom for all the foals to have fun in and play with the mini ponies.
The North Tower
The north tower holds the offices of the Captain of the Guard on the top floor, the offices and inventory of the Quartermaster on a lower floor, the barracks of the Friendship Guard.
Much of the "trunk" section of the CastleBrary is taken up by the library, which has all of the books rescued from the destruction of the Golden Oak Library by Dr. Whooves, as well as acquisitions made by the library staff since then. It also has several legal and historical documents regarding the areas in and around Ponyville.
There is also a small office suite for the librarians, located behind the checkout counter in the library. It features a modestly sized room with desks for each, and a smaller private office for the Head Librarian. Windows in the main office allow occupants to see out into the library proper. Behind a cunningly-disguised section of wall is the librarian's breakroom, which is smaller than the office but has a grouping of comfortable couches and chairs along with a fireplace and kitchen nook. In a small loft above the breakroom are a few cots and some beanbags, for tired librarians to nap on.
The Observation Deck
A large observation deck is adjacent to the Ballroom and accessed via high arched crystal doors. The observation deck is used for parties, large public announcements, and stargazing sessions.
Dr. Ace Bandage's infirmary is a large, clean, well-lit suite of rooms on the main floor of the CastleBrary.
Twilight Sparkle's personal chambers are in an upper level of one of the corner towers. They consist of a bedroom, an office, and her personal library.
Guards and Staff
Some time after The Palace of Friendship rose from the ground, and Twilight gained her Title as Princess of Friendship, Princess Celestia established a Royal Guard for Twilight. Shortly after returning from the village established by Starlight Glimmer, Twilight renamed the Guard to The Friendship Guard and held a job fair in order to fill out her staff.
The full listing of Castlebrary Staff, and their positions, is available here