The story in Pokemon is nonsense too, doesn't stop the games from being fun. And not all of the monsters look gross. Like the cat is cute (though it seems like there's a bunch of them for different elements or something, kind of overkill) but that weird dog thing with the human face is just disgusting. Not sure what they were going for with that design but it is just not pleasant to look at.
I can suspend my disbelief to an extent, but the whole first episode was full of just dumb stuff like that. Human can't see Yokai.*
*Except for the ones they can.
The kid's reaction to seeing a ghost was just badly written too. I don't expect a kid's game to have some Pulitzer Prize winning story or anything but it really feels like they designed this around the spirit characters to sell merchandise and then at the last second remembered "Oh shit, there has to be a reason for people to want to collect all these things, doesn't there? Oh well, get an intern on it, I want a script on my desk tomorrow afternoon."