Pan's labyrinth is an inner landscape, mythic language expressed through celluloid. While it may look as though the film pivots back and forth between polarities, the outside or "real" world and the mythic realm, the story is grounded in the latter. In other words, both the outside world, with its characters, its violence and conflicts, and the mythical world, with its phantasmagorical and strange creatures, are really a symbol for the world of the psyche. Monsters, villains, cowards and heroes are all represented in this film on both planes, and while it includes some visceral and violent scenes, they are not gratuitous. They demonstrate the ugliness of the fascist mentality, which on the surface can be related to political and social conflicts; but more importantly they depict the human being's blind obedience to an unquestioned authority and its resulting ugly oppression.
The story follows the typical Hero's Journey myth, complete with trials that the heroes - yes, there are more than one - must pass and is filled with symbolism at every turn. I highly recommend this film, which is beautiful and sensuous in every respect. The trailer below was made for mainstream audiences and does not do justice to the mythological themes in the film: