-edited ;) -
As I understand it, Schloss and Burg are both translated to "castle" in English, but Schloss is more like palace, or royal residence, and Burg is more like a fortified castle, designed to be defended by the military... a stronghold.
Here's a link with info. http://www.german-way.com/travel-and-tourism/germany-for-tourists/castles-and-palaces/
Why isn't it spelled with the ess-set?
Because the vowel is short.
The spelling reform of 1996 changed how ß is used -- no longer is it used at the end of any syllable, but only after a long vowel or a diphthong.
Thus Schloß turned into Schloss, while Floß stayed Floß (but the verb form es floß became es floss).