@Fenrixer  
I have a head canon theory for that: in the distant past when Equestria was still only young and the unification of the Three Tribes was only recent, Equestria was ruled over by a council consisting of Chancellor Blood Pudding “Puddinghead” of the Earth Ponies, Legate Hurricane of the Pegasi, and Princess Jaded Platinum of the Unicorns. However Jaded Platinum wasn’t an only child, she had an older brother, somepony who was ambitious and jealous of the power that his sister wielded, Cobalt Platinum was his name, and he had a dark secret hovering about him: he was a former Acolyte of the dreaded Goat Necromancer Grogar, and filled with just as much malice and contempt for the other Tribes as any other Unicorn, though he had hidden it very well on his exodus from the frozen wastes of their old homeland of Alogo and joined the other survivors in the southern lands that would become Equestria.  
For years, Cobalt Platinum waited for his chance to prove himself as someone worthy of the council, and gave off an air of somepony that can be trustworthy of the tasks ahead. Then one fateful nighf, Cobalt made his move that would irrevocably shake the Council to its foundations: he murdered his own sister, and pitted the blame on the Legates’ 2nd-in-Command: Sage Pansy and his Swiftwind Legion. Sage Pansy was to be arrested and executed the following night, but was unexpectedly saved from his fate by an unlikely ally: his secretly beloved wife, the Unicorn Magi and former disciple of Starswirl; Clover the Clever. Clover asked of her secret husband to run away and flee as far away from Equestria as he could go, having been made aware of Cobalt Platinums’ treachery.  
Sage Pansy and his Legion of Swiftwinds fled south towards the gnarled and untamed wilderness of the Badlands in desperation, seeking to find allies that would grant them reprieve and sanctuary and an ally to help strike down the machinations of the mad prince when the time was right, and in his journey he came across a highly-unanticipated ally: a Conclave of Alicorn Monks and Nuns: Ponies from the lands of Alogo that had reached the requirements and patience for Ascendancy that in the minds of the other three tribes posed as monsters and bringers of misfortune in their cultures: to the Pegasi: Alicorns were failed experiments made by Uniforns to wage war against the Pegasi, to the Unicorns: Alicorns were half-breed vermin that diluted their blood with the other Tribes, and Earth Ponies saw them as an omen of change that could upheave their entire world that needed to be avoided. These Alicorns had banded together in their shared Ascendancy to flee southwards into abandoned lands long before the founding of Equestria to make their own way in life: starting this Conclave to be a central governing body ruled over by a Grand Priest or Priestess that was chosen by a Council of Elders and trained by the previous Grand Priest to take their place once deemed worthy for the task.  
Sage Pansy and his Swiftwinds approached the Alicorns, asking for sanctuary from the evils of Cobalt Platinum and to help them overthrow the tyrrany he planned to unleash. The Monks and the Nuns deliberated for a time until one of them Ahn’she said that this might be their only chance to show their families that the Alicorns are not simply outcasts or monsters that need to be hunted. The Council of Elders saw the undeniable truth in this prospect and agreed to provide Sage Pansy and his Swiftwinds with sanctuary.  
Back in Equestria, things were starting to take a turn for the worst as Cobalt Platinum started to slowly reintroduce and instigate aspects of Unicorn supremacy once again into the burgeoning government, making it legal to own slaves and to execute anypony on the grounds of treason unless they happened to be a Unicorn. Blood Pudding and Legate Hurricane began to see the signs of deception and treachery alongside confirmations from Clover the Clever on that it was Cobalt who had murdered Jaded Platinum. A resistance movement created by Smart Cookie and Clover the Clever would soon establish itself secretly led and funded by the other two council members and assisted by the Diamond Dogs and the Deer that had lived in these lands long before the Three Tribes ever came: their one goal being the end of Cobalt and his Neo-Unicornia.  
The resistance movement would soon be joined by the Alicorn Conclave and the Swiftwinds, returning from their long exile to exact justice and Retribution on Cobalt for his crimes in the First Battle for Canterlot. 30 days spent fighting inside of the city, Cobalt not even caring to lower the Sun in the ensuing conflict hoping that it would be enough to create hopelessness for his aggressors and cement his rulership, only to recieve a shock from seeing the Moon rise and eclipsing the Sun as an Alicorn Nun channeled her powers to move the Moon into place, joined later by her own sister in using the Moon as a conduit to take control over the Sun and have it lowered and diminishing Cobalts powers significantly and facing the wrath of the Grand Priestess in battle.  
Lord Cobalt was wounded and defeated by the combined might of the Grand Priestess and her two adoptive daughters that took away Lord Cobalts power over the Sun and Moon, however even in his defeat the Unicorn refused to give up and struck the Grand Priestess with a necrotic spell that slowly killed her. Her last act was to make her adoptive daughters the new Grand Priestesses to lead the Alicorn Conclave and to unite them once again with the Three Tribes as they had prophesied long ago. The newly-established Grand Priestesses would work alongside Blood Pudding, Smart Cookie, Legate Hurricane, Clover the Clever and Sage Pansy who had passed the rites of Ascendancy in his exile alongside many others of his Swiftwinds would form a new governing body of Equestria, deferring executive authority to the Grand Priestesses that controlled the Sun and the Moon single-handedly: Dawnbringer Celestia, and Duskmender Luna.
 
Over time, ponies would come to misspell their title of Grand Priestesses, turning them from “Grand Priestess” to “Priestess” and eventually to being “Princess”.

@Fenrixer
 
maybe ponies just like calling their leaders princesses.

@Background Pony #6993  
This whole ‘Ruled by princesses’ thing really makes no sense at times. From a purely practical standpoint it makes no sense.

@Fenrixer  
When the princess has a daughter, she becomes a queen, and the daughter is the new princess  
That’s how it goes usually

What’s the daughter of a princess called? Or is there not really a term for that?