As I am woefully self-educated you should not take my word on this: I think video is based on a traditional Japanese tale because the beginning seems really familiar. Or maybe I’d seen it before, maybe on a DVD from the library. Regardless, this was “the first Mothra film to make it to Sundance.”
Check out the Borscht Vimeo channel for more decidedly odd stuff.
The puppets are performed by the Bunraku Bay Puppet Theater, the only such performance troupe here in the States, based in Missouri. Their name is apparently an elaborate play on words, if you speak Japanese.