Munchhausen as outlier in Nazi film world

Munchhausen stands out as a film drastically different from those we have seen thus far, mainly due to the fact that it is unapologetically unrealistic to the point of absurdity. It is also in color. However, the absurdity comes in large part from the narrative structure as well as the content within that structure. Munchhausen is not the first film we have seen from the Nazi era that tells its story through some specific character relating their tale-- for example, this was a prominent feature of Romance in Minor Key, in which the main story was told in a series of flashbacks and through the point of view of several characters. However, despite these two films sharing the characteristic that their main narrative is embedded as flashback, Munchhausen is definitely the outlier when compared with other films of the era. It takes us on a series of journeys and plotlines that become steadily more difficult to coherently interpret, and the content within is also difficult to accept, which I assume would either make the audience laugh or just feel very confused and skeptical. Even the beginning of the film is destabilizing, in that by all appearances the first party scene is set several hundred years ago, until we begin to see some things out of place and finally a car, which causes the audience to reinterpret the nature of the whole reality they have just seen. But the film only gets more bizarre as we see coats barking like dogs and trumpets that have the notes "frozen" inside them. The overall effect of these film techniques is one that is either highly comical (supposedly) and/or just very destabilizing... but no matter how the audience responds, it is clear that this film is not conforming to the realism of the others of its era, and implies that Nazi film was, for some (probably significant) reason, taking a bold new direction.