Here's how I interpret that phrase:
When you watch, say, a well-produced farce by Georges Feydeau you are seeing two things. Firstly, you're seeing a finely crafted work of literature, performed with precision and perfect timing by expert artists. At the same time, the events within the play appear to be chaotic and disorganised. So you're watching a farce but the events around it (e.g. the production levels) are far from farcical.
Let's suppose though that you go to an amateur production of the same play, where the standards are far lower and everything goes wrong. The actors can't remember their lines; the lead character's mobile phone goes off in his pocket halfway through a key speech; the curtains get stuck half open; the lights blow the master fuse and everything goes black; a dog runs onto the stage; etc; etc.
In that situation you were meant to have been watching a farce but the situation around it has itself become farcical. i.e. farce has become farcical. The same phrase can be used, by extension, to refer to the work of an author who is trying to, say, mimic the style of Tom Sharpe but who makes a complete hash of it.
Chris