Note, Oct. 26, 2022: I just edited this review slightly, to supply an omitted predicate phrase in one clause, which I didn't catch until I did a reread just now. I'm amazed that I'd missed that before!
To fully appreciate the significance of this novel, we have to understand the literary and cultural climate of Western Europe in 1764. The 1500s and 1600s had seen unprecedented social, cultural, religious, economic, technological and political change, which made the literate classes well aware that they had entered a new era of human history that marked a sharp break with the immediate past. A flood of new inventions and discoveries enhanced the prestige of science and Reason as the only legitimate fountainheads of truth; supposed clear-eyed, logical rationalism was in, and "superstition" and sloppy human emotions were passe.' At the same time, the Renaissance had sparked a rebirth of awareness and appreciation for the thought and culture of classical antiquity, which came to be seen as the embodiment of rationality, order, sobriety and harmonious balance in society, art, literature, and architecture. (Of course, that represents a very selective recapturing of the Greco-Roman world, that ignored all of its more sordid and Dionysian aspects; but it passed for reality in the minds of 18th-century intellectuals.) To the adherents of the Neoclassical school of thought that dominated European civilization from about 1688 to 1789, the days of ancient Greece and Rome were the Golden Age; the medieval period was a long. horrible Dark Age in which the dirty, ignorant barbarians ran roughshod over refined culture (the Goths were one of the main barbarian tribes that overthrew the Roman Empire, so anything medieval was "Gothic"); and the "modern" era was the glorious new dawn in which the example of classic antiquity was lighting the way to another Golden Age. (We actually get our whole "ancient, medieval, and modern" schema of historical periodization from the Neoclassicists of that day.)
This school of thought shaped the way prose literature in most of the 18th century was written; there were very definite rules, and the critics of that day parroted and enforced them. Sentences were ponderous and complex, but carefully balanced in terms of number of clauses, modifiers, etc.; elegance and regularity of style, in adherence to ancient models, was everything, and writers cultivated a dry, ponderous tone devoid of emotion. Nor did they try to arouse feeling in the reader; appeal was strictly to the dispassionate intellect. In fiction, the subject matter was their own time, not the past, and stories were to have a plot that a "reasonable" person could believe. (Gulliver's Travels is a seeming exception that tests the rule, but even there, Swift writes his tale as a dispassionate, purportedly real travel account, and Juvenalian cultural satire trumps thrill or adventure in the story-telling.) The supernatural rarely appears, and if it does, in stories like "A True Account of the Apparition of One Mrs. Veal" or "The Vision of Mirzah," it's just a rhetorical device for religious or philosophical instruction, not a menacing element with a real scare factor.
Enter Horace Walpole. :-) He wasn't enamoured of the tastes of an age that, as he wrote in a letter in 1767, "wants only cold reason." Rather, he aimed quite frankly to, as Sir Walter Scott would write in his introduction to this novel's 1811 edition, "excite the passions of fear and of pity." Moreover, he was quite interested in (gasp!) the Middle Ages, set his tale squarely in medieval Italy during the Crusades (mid-12th or 13th century), and treats medieval people and culture as worth knowing about. And he aimed to restore a kind of storytelling that gave the writer freedom to let "the powers of fancy" range through "the boundless realms of invention," thus "creating more interesting situations" (Preface to the 2nd ed.), without being shackled to conventional realism. So, with this book, he created the first modern English novel set in the past, the first supernatural fiction novel, and the first example of what we now call "Gothic" fiction (with a heroine in danger in the setting of a big, scary old dwelling and an atmosphere of spooky menace). It was the first salvo of the Romantic movement in literature, which would displace Neoclassicism by the end of the 18th century.
In the same Preface quoted above, Walpole commented, in a moment of modesty, "...if the new route he [the author] has struck out shall have paved a road for men of brighter talents, he shall own with pleasure and modesty, that he was sensible the plan was capable of receiving greater embellishments than his imagination or conduct of the passions could bestow on it." He proved prophetic there; most readers would say that a number of literary men (and women!) who followed him in developing the Romantic, supernatural, Gothic and medieval-set strains of fiction he set in motion displayed brighter talents than he did. This novel has its undeniable flaws, the biggest one being that his characters are cardboard, more two-dimensional types than people we really feel like we know. Some aspects of his supernatural phenomena aren't explained well, or aren't followed up after being introduced. Some of the female characters' acceptance of oppressive patriarchy can be eye-rolling (though some display more independence and agency at times!), and there are places where the dialogue is excessively melodramatic. (It also takes getting used to that he doesn't use quotation marks, or separate speech by different characters into different paragraphs, but that's not his fault; in 1764, those conventions weren't yet fully developed in prose fiction.)
For all that, the book does have its pluses. The story-telling is brisk-paced; at only 110 pages of actual text, unlike some doorstop-sized 18th and 19th-century tomes, this is a quick read, and the diction is not intimidating (at least, not to me --granted, I have an ease with old-style prose that comes from reading it as a kid and never developing a prejudice against it, but I think any modern reader with an adult reading level could enjoy this without difficulty). There are really no dull moments (we start with a violent death four paragraphs into the story!); it held my interest throughout, and even though Walpole's characterizations are not sharp, I did like and root for certain characters, and genuinely cared about what would happen to them. Concealed identity would become a common Romantic trope; but given medieval conditions, it's not unrealistic here. Although Manfred, prince of Otranto, is an arrogant, self-serving tyrant, Walpoles's own attitude and message here is solidly moral. In reading this, I noted the Shakespeare-like treatment of the servants in the book (Walpole's own preface notes Shakespeare's influence there, and defends the Bard against the Neoclassicist Voltaire who had disparaged him on that grounds). An added advantage of the 1964 Oxford Univ. Press printing that I read is the Introduction by Walpole scholar W. S. Lewis, who notes not only that, but a number of other Shakespeare parallels and influences here.
My overall rating of the book is positive. If my review picques your interest (rather than scaring you off! :-) ), I'd recommend giving the book a try; and if you're a serious student of literature, it's a must-read.