Third Segment - Scary!
I mean this in the best possible way, but that third segment is genuinely scary and disturbing on many levels, IMHO.
***************SPOILERS AHEAD**************************
The creepy atmosphere (including the very dimly-lit (cartoony) house), a family controlled by the son's mind, Ethel trapped in the evil cartoon (Wolf-surgeon in operating room approaches her with a bloody hatchet saying "We've been expecting you") -- it's all so very twisted, dark, and creepy. Add to that the girl with no mouth, a very menacing and gigantic demonic bunny-rabbit, a Tasmanian demon waving its knife-like claws in front of the family -- it's the stuff nightmares are made of. "Th-th-that's all, Ethel." This very well-crafted third segment (along with the fourth) complement the opening and closing of the movie as they consist of definite horror. The sweetness, sentimentality, poignancy, and lighthearted humor of the second segment make the darkness of the next segment so much more unexpected. I think this is a terrific horror and fantasy movie, but that third segment is much of the reason this movie is primarily classified as a horror movie.