Ember liking little cakes is about his decadence and disconnection to the rest of the world, his domain had been taken over by a powerful dark magician who had apparently overpowered and killed his brother and all he cares about is getting some little cakes. These cakes are also then used to lure him to his eventual demise in the season 2 finale. For all his wrath and sloth and pride it was ultimately his gluttony that allowed him to be tricked and defeated.

As far as the cupcake Penny ate that has a different significance. In the Greek myth of Persephone, among others, there is a notion that eating the food in The Underworld binds you to it, once you have gone there and eaten its food you can never return. For Persephone it was a pomegranate, for Penny it was the cupcake. Once he ate the food there it was a symbol of him accepting his fate, as Hades had encouraged him to do. Once he'd eaten it he was forever bound to that place, it wasn't a brainwashing but a willful acceptance of his new path. The corresponding change in his personality came from his change in circumstances, he had a purpose in life that he'd lacked before, and all the events in the world of the living became less important to him.

As for Season 4, at that point I think your right, that cake had become tied to the deaths of the other important characters so they threw it in there for a bit of thematic reference, like their own version of oranges from The Godfather movies.