Lulu appears to be a simple princess but she uses this form to hide her true identity as a Goddess who is part of the group of the Mystic Guardians of the Marioverse. A group of deities that aim to maintain the balance of all the multiverses of the Mario series and eliminate the anomalies that try to corrupt the universes leaving them uncharacteristic and horrible. Each Mario universe is divided into several multiverse groups overseen by each guardian:
The Canon Multiverse (Nintendo)
The AU multiverse (fan-made ones)
The multimedia multiverse (films, cartoons and comics)
The bootleg multiverse (pirate games.)
The multiverse of politically incorrect parodies (like SMG4, Dorkly, etc)
The Multiverse of Bad Games ( Hotel Mario and etc)
And The Fallen/Corrupted Heroes multiverse (where all Marios of corrupted dimensions go and become dark, edged, depressed, cruel versions of themselves)
Lulu is the one who takes care of the canon multiverse and cares a lot about taking care of her universes so they don't get corrupted and go to the multiverse of fallen heroes even if she makes some impulsive decisions. She has a true Goddess form but uses a human form to communicate with characters in her universe (especially the one from Mario Prime) only in moments of crisis in the multiverse.****