MIF15: wonder.land @ Palace Theatre, Manchester

It is notoriously difficult to represent the virtual world in physical art. A new musical scored by Damon Albarn and premiering at Manchester International Festival, wonder.land, succeeds partly because its vision of cyberspace is bright and boisterous, borrowing more from platform-game aesthetics than frictionless 4G, and because it is – unexpectedly – very funny.

National Theatre director Rufus Norris and lyricist Moira Buffini have upgraded Lewis Carroll's Wonderland to the titular 'wonder-dot-land,' an online role playing game that frustrated teenager Aly (Lois Chimimba) accesses via smartphone app. Populated by other insecure outcasts masquerading as ragdoll rabbits, dodos and mock turtles, and presided over by an ultra high definition, emoji-like Cheshire cat, it soon becomes an addictive escape from her bumpy home life and bullying at school. When her phone is confiscated by her headteacher, Ms Manxome (Anna Francolini), Aly must find the confidence – and assemble both her real-world and virtual pals – to rescue her beloved avatar from its new, malevolent user.

Hooking up Carroll's theme of ruptured identity to the internet's endorphin-rush potential for self-reinvention, Norris and Buffini are able to refract the original, iconic Alice into multiple mirror images. There's our protagonist, Aly, and the idealised but bland digital Alice she builds: blonde-haired, blue-eyed and slim; personality, “the kind that people like.” Initially, Alice (Rosalie Craig) is an absurd confection, tottering Sim-like around the stage in towering anti-gravity heels and a cobalt-blue tutu, parroting Aly's commands in a very convincing humanoid trill. Later learning empathy and autonomy as she and Aly cleave closer together, Alice becomes vulnerable to hijacking by Manxome – also called Alice, and this production's Queen of Hearts – who is hell-bent on painting the roses red with pixellated blood. (Manxome is later subjected to trial for identity theft by Twitter mob, a nice nod to recent debate on public shaming.)

A lot of this is either achieved or enhanced by quite stunning projection work from go-to film and effects lab 59 Productions, which is so svelte and cool that it risks dwarfing the action on stage; indeed, while thought has been given to Aly's monochromatic home and classroom environments (the paper-chain children; walls migrating around the stage like windows on a computer screen), there are more than a few periods of impatience for the next bout of pyrotechnics. As such, the second act, perhaps inevitably now that we're largely back in the realm of the 'real,' falls far short of the first.

However, the costuming is more than a match for the technical wizardry, and some of the ensemble pieces attain a wonderful light-headedness, in particular the Mad Hatter's Tea Party, which is reimagined as a sort of hysterical pileup of cupcakes and LOLcats. A special mention must go to the choreography of the digital characters, especially the white rabbit (Rob Compton), whose suspended-animation bounce – less Duracell bunny, more Apple robotics – adds threat to an already unnerving combination of clownish bloomers and featureless, prototype head.

It doesn't all work. The story needs more bite – the braying tenor of the bullying feels a bit dated, and its mode of display is less sinister than it could be. As comparison, effective scenes in recent TV dramas Cyberbully and Russell T. Davies's Banana spring to mind, where the rapid accretion of chat boxes and the eerily innocent-sounding tumble of notifications created a nauseating claustrophobia. (Incidentally, it would be interesting to know what fellow MIF15 artist Nico Muhly, whose 2011 opera Two Boys – also using 59 Productions – was among the more prominent attempts to represent online chatter on stage, makes of wonder.land's completely antithetical look: chunky, 8-bit messaging systems against Muhly's slinky, slithering darkweb).

Elsewhere, the Uni Lad Tweedledum and Tweedledee feel like a bit of a misfire (although they're pretty accurate as comment-box morons), and the dialogue around the overlap between life online and 'IRL' is sometimes overstated; the concept doesn't need so much explanation. This is a kid-friendly production, however, so the signposting can be forgiven – and what it might lack in profundity it more than makes up for in visual candy. Albarn's work, meanwhile, really shines in the quiet moments, two significant duets showing off his writing for soprano as having all the sweet clarity and fizz of neon. As long as the white rabbit's strangely haunting, pneumatic ears don't upset your dreams for nights to come, wonder.land is surreal good fun.