According to producer Yoshiaki Kazumi, in an interview with Polygon, the reason why Pauline made a comeback in this game was because they wanted to give players something familiar to focus on in a strange place.

“When we were deciding which Kingdoms to have in the game, we knew we wanted the city environment, and we wanted something that would have resonance with players. We knew that players know Pauline so we of course wanted to make her the mayor of New Donk City. It's important to note that though they are called Kingdoms, they do not necessarily have royalty, and that's why she's the mayor.”
Contributed by GamerBen144