Many of the jokes seems to be cultural or for fans of the original cartoon show. For a newcomer it is approachable to learn about little Rantaro training to be a ninja at a ninja academy and gaining a few friends. Soon the film develops into a race between the entire ninja academy and some bad ninjas over honor and the lives of two hair stylists.
Jokes like two hair stylists being put in danger show how funny and odd this film can be. There's a bit where the ninja announcer literally breaks apart the background like paper and explains something about Ninja culture. Then you have a middle-aged man going to the 1st grade of ninja school. The constant slapstick helps too.
So many freaking kids doesn't help though. Even though the film is mainly about Rantaro the film is filled with other ninja kids who you might meet for just a few seconds. There's too many of them to follow. The story loses sight of Rantaro for minutes on end with these throw-away characters.
There are talks of an American remake which I can't fathom on how bad it might be. When a Japanese film made in Japan by the Japanese isn't that great, why would an American version be better? Pass on Ninja Kids!!! and see another of Takashi Miike's movies.