Is there a narrative reason why Majora's Mask reuses so many art assets?

There is no one reason that was ever given why this has occurred, however there are a few theories about this.

The main one that stands out is that Link is actually dead/dying. The events of Majora's Mask are actually in a sort of limbo/purgatory environment. Hence why he is remembering all of these things in his delusion, as deaths cold embrace takes him...

Hey, explains why everyone else is dead and dying. It's a way for Link to come to accept his own death.

Another theory, though probably not as well known or accepted is that Link has wandered into the Lost Woods. Without Navi, he has lost his way and begun to go slightly mad. Why he has gone mad? Magic? He's been lost for a lot longer than we could perceive? Who knows.

Again, in his delusions, he is remembering things from his past, and placing them together in his mind.

So the one thing we can take away from this is that basically, (while this is never truly explained and we can only ever speculate) the world of Majora's Mask is a delusion, constructed in Link's mind.

EDIT: Some key points to support the Dead Link theory are:

• The fall to reach Termina (which is inside a tree) doesn't make physical sense. Link fell a long way, only to end up... back outside?
• The characters that you gain the transformation masks from are either dead/dying.
• The "Elegy of Emptiness" allows Link to create statues of the (dead) Characters he transforms into... including himself.

As for the "Lost in the Woods" theory,

• The Skull Kid was originally found in the Lost Woods, which the wiki states

  A Skull Kid is what a child becomes after getting lost in the Lost Woods. They appear in Ocarina of Time, Majora's Mask, and Twilight Princess. One first interacts with Link in Ocarina of Time, and later plays a major role in Majora's Mask.

• As Link is not a Kokiri child, he is actually susceptible to the effects of the Lost Woods.

• Additionally, further down the official timeline in Twilight Princess you meet with a Stalfos claiming to be the Hero of Time. While a Skull Kid is the outcome of a child being lost in the Lost Woods, a Stalfos is what adult turns into when lost in the Lost Woods:

  "That guy isn't here anymore. Anybody who comes into the forest will be lost. Everybody will become a Stalfos. Everybody, Stalfos." — Fado (Ocarina of Time)

  "Adults lost among the trees turn into Stalfos, while children turn into Skull Kids; both are doomed to wander the woods." (Hyrule Historia (Dark Horse Books), pg. 84)

Majora's Mask was also developed under a deadline of ~8 months, so reusing assets from OoT was necessary to meet said deadline.