* It's a "dream" world: The film could be interpreted as a dream-like state where the Looney Tunes exist as a distinct, fantastical reality. This could explain their ability to defy physics and logic, and it ties into the idea of Bugs Bunny "dreaming" up the whole scenario to escape the Monstars.
* It's a parallel dimension: The film never explicitly states Looney Tune Land is on Earth, suggesting it could exist in a separate dimension entirely. This allows for the bizarre and illogical events to occur without breaking the "rules" of our world.
* It's a cartoon world: The film leans heavily into the idea that Looney Tunes exist in a world governed by cartoon logic. The rules of physics, space, and time are fluid and malleable, allowing for impossible events to happen.
* It's a metaphor for imagination: The film could be interpreted as a story about the power of imagination, with Looney Tune Land representing the limitless creativity of the human mind.
Ultimately, the film's creators likely didn't want to overthink the logistics of Looney Tune Land's existence, choosing to focus on the fun and comedic elements of the story. It's a classic example of "suspension of disbelief" at work - you just have to accept it and enjoy the ride!