Television and movie screens are much larger than computer screens. If the creators of a hypothetical live action film knew what they were doing, they’d use size to their advantage and make the world bigger. This would provide more room for visual effects and create more of a setting, as well as give the creators an excuse to show off and manipulate the worlds as they see fit. They’re not going to put everything in one scene, of course, so it’’s kind of necessary to make everything big. Although I do agree that the game has a limited scope. One of the reasons I liked the “official” manga was because the panels were relatively small, making the world feel somewhat closed in. But that wasn’t a bad thing.
There’s a brilliance to Yume Nikki that stands out through its level design. It’s easy to get lost in the different worlds because there’s no guide markers or dialogue. It really feels like you’re in a dream, or just thrown into a strange, alien world while playing. That effect may have been deliberate on Kikiyama’s part. However, this effect could not easily be simulated in a normal video game, much less a movie. YNDD was created by multiple people, while Kikiyama was one person, and an entire team will impose different ideas on their creation. That is why they made the new game a side-scroller. While an art film could work (and I would really respect the creators if they went this route), most movies need dialogue, plot, and exposition to create a story. You aren’t just presenting to one person when making a film; you’re presenting to an entire audience. Some of which might not have played YN and complain about its more alienating features because they honestly don’t know about them.
An example of a film I can think of that utilizes this is Coraline. In fact, all of Laika’s films do, and I mention them because they have excellent stop motion and abstract imagery. I was a bit loathe to do so initially, because the anon who mentioned Merry Melodies was shot down for it- but everyone in this thread has been talking more about animated adaptions than live action, so I’ll discuss my preferences. Coraline has some really great scenes in it, and though the creators did things I don’t like I still think it’s excellent. It was based on the book of the same name, which came out long before the movie did. I remember it was really surreal and dream-like, and there was more of a focus on imagery than dialogue. The creators made the movie more dialogue-heavy and added a new character, but that was so Coraline wouldn’t spend the whole movie talking to herself like she did in the book. The changes they made were good because it provided the audience with more of an idea of what was going on, and they didn’t go too far with them. The new scenes still held the spirit of the original, which was one of the best things about it.
My point is, a live action adaption would require a lot of changes if it were brought to the big screen. But that could be a good thing, and add content that is well-received by viewers and fans alike. A silent art film would be excellent, though.