Characters or players!? 
Both sometimes
The zany side of Norland is over-exaggerated, perhaps because it's unusual and so sticks in the mind more than the more mundane things. Most people only occasionally flirted with silliness and most of the silliness could be rationalised as being the sort of army humour used to keep spirits up and encourage a sense of camaraderie. Princess Lucky was probably never actually used as a siege engine and likely didn't really eat an enemy scout when her supper was delayed.. but the thought she might have sure cheers you and your shrinking band of comrades as you march through another cold and muddy field on your way to another brutal battle. I doubt that human nature has evolved so much that people in the middle-ages did not have a sense of humour, and even a dark, silly and bawdy one from time to time.
Sure, the Viking culture in Norland was a caricature (though certain people had enough knowledge to add some authenticity) but most realms are a caricature of medieval culture to some extent due to the limits of players' historical knowledge.
