Ghouls 'n Ghosts is tied with Super Ghouls 'n Ghosts as my favourite game in the series. It's a monster of a sequel that improves each and every thing that made Ghosts 'n Goblins special, while also introducing way more stuff and a far more reasonable (while still tough and punishing) difficulty.
The basic formula remains the same: a horror-themed, medieval run and gun platformer. The premise is basically the same as before: save your princess from a demon, Lucifer in this case. There are many tweaks in the gameplay, however: for starters, you have way more weapons that are mostly usable, and each is better suited to specific sections of the game. There are also magic chests that appear by performing specific jumps or reaching certain spots. They can contain an evil magician who will try to transfigurate you, a weapon or a golden magic armor that doesn't grant any additional hit points but allows Arthur to perform magic spells. Spells aren't super useful to be fair, but they're a welcome element of variety. By opening a chest with the magic armor equipped, you can also get a powerful Psycho Cannon, a weapon required to reach and defeat the final boss, but only in the second loop (damn this arcade mania with making the second loop required). In short, the game is more varied and approachable, and stages offer many different situations keeping things fresh. You may find yourself trudging through a level like normal, but also dodging traps and hazards or ascending a ruined tower with a magical elevator. The bosses are also unique for each level (though some of them do reappear in the final stage as mini-bosses) and fun to fight. It's basically a perfected formula for high-difficulty, high-reward action gameplay and it's a lot of fun, even though it's still very difficult (but rarely cheap).
The graphics are incredible, with vibrant, varied stages full of colour and details that make them come to life. The opening execution grounds are littered with corpses hanging from crosses and guillotines, before traversing a windswept meadow during a storm and climbing amidst a treacherous forest. That's only one stage! In the second, you'll traverse the windmills outside a ruined city, some of them filled with quicksand and dangerous creatures, before reaching the city itself, now engulfed by flames. There aren't many levels, but each is overflowing with cool ideas. The music is fantastic as well, with memorable tunes that also succeed in beautifully setting the mood of each stage, with a mixture of foreboding and whimsical that's signature G'nG.
This is sometimes considered one of Capcom's best 2D platformers and personally I would agree, it's a masterpiece and one of the best games of the era.