This is definitely not everybody's cup of tea. The jumps in the narrative and in the editing might make a lot of people wary, and it's totally understandable.
However, the changes between anime and live action, between real and fantasy, and even between genres, including the score, are what make this surreal horror film wonderful. While everything seems random at some point, it is definitely calculated by Obayashi.
The effects may lack of technical input, which at times may make the film feel cheap or cheesy, but they are definitely ingenious and entertaining. I think at all times we are signaled that the film is fully self aware of this and uses this as an advantage.