I mean, for the first question, the answer is basically "people like to draw are of their favorite things." And, well, clearly there is at least one person on the internet who can draw, who likes MLP, and also likes Midna. You might as well as "why do people make fan art."

As for why it's here, the image could just as easily be posted in either gallery – it's pretty clearly a 50/50 split. And while I would understand moving it to the MLP gallery back in the early days years ago when the site was absolutely overflowing with pony stuff, that hasn't been the case for a while. A little spillover isn't that big of a deal.