The medieval period was fuedal. It was all about a rigid hierarchy of loyalty and fealty. At the top was the King. Important phrase for the period; 'The Divine Right of Kings'. Kings WERE the state, they were their country/society personified. Chosen by God and beyond question. This was the system. But of course it was often questioned and usurped and threatened. A king did not sit easy on his throne and always looked for support and legitimacy.
So in Arthur's story this bond between king and land is made literally physical. The land and the king ARE one thing. They thrive together, they suffer together. And Arthur is a true virtuous man and king who passed an uncheatable test (the spirits of the land gave him Excalibur). He is The Rightful One True King.
So it was a story which was very 'in favour' in medieval lit because it was very supportive of the status quo. It idealised and strengthened Monarchy and it lionised Knights who were good, honest, brave, loyal etc.
It paints a picture of the the best virtues of a feudal Monarchy and endows it with glamour and lends authority to the system and so was well recieved and encouraged by authorities.
(Just as many films and TV programs today are very praising and supportive of America or democracy or the military but Micheal Moore, who criticises it, is marginalised.)
If only Gweneviere hadn't come along and wrecked it all with her feminine charms, eh? ;-)