In my hypothesis, some ancestor of his (the castle is stated to be ancient in the title sequence) emerged from the cave network one day (which at the time was connected to a simple hole in the ground rather than a castle with a trapdoor), somehow acquired a Noble title from the king of the land (perhaps by devouring an invading army?), and then had a castle built on top of the cave entrance, both to A) prevent anything else of the Lord's size from coming out and potentially threatening the countryside, and B) allow the Lord and his descendants to act as a Beef Gate against anything that does get through. The reason they left any sort of opening into the cave network at all is because, again, The Lord's species feeds on those creatures.
Think about it. They both look pretty similar. Berk's species is probably related to Cookie Monster's
