I'm surprised no one has mentioned the fake old movie that plays in Home Alone. "I'm gonna give you till the count of 10 to get your ugly yeller no good keester off my property before I pump your guts full of lead! One... Two... Ten!" 🔫🔫🔫🔫🔫
The "adult" movie Kevin watches in Home Alone. Apparently the main dude who was supposed to be in those didn't show up so they just had some janitor or tech fill in and he went full ham on that shit and made it something to remember.
There's also the McBane movie in The Simpsons that shows up in multiple episodes and if you connected them all together they actually make a coherent story line (it's just riffing off Lethal Weapon anyway).
Interdimensional Cable from Rick and Morty is outrageous.
GTA's radio stations (VCPR was the best) and TV shows are often really funny. The Pißwasser beer commercial from IV always gets me.
The lore books in The Elder Scrolls series, hands-down.
There is an entire universe of conflicting knowledge, personal bias, and unreliable narrators that leave Tamriel's history feeling very real, and very open to interpretation. The fun of it is piecing together the truth somewhere in the middle. But I'll die on the hill that the Arcturian Heresy is absolute horseshit written by a madman, and comparable to the scribbles of a paranoid schizophrenic on an anti-vax forum. Anyone who references that volume in regards to Tiber Septim and the forming of the empire is an impressionable dweeb.
This is not exactly what you're asking for (media inside media), but it's really close in spirit (nested narratives), and I really like it: a book written in Portuguese in the XIX century, called Noite na Taverna (Night in the Tavern).
The book has an overarching story of friends telling each other stories in a tavern, over booze; with all those nested stories being about love, despair, and death (it has a strong gothic vibe).
And, as each character tells the others a story, there's always that fishy smell that the story might be actually bullshit; and other characters do raise some doubts about its in-universe veracity (like Bertram does to Solfieri). And you, as the reader, do the same - but in no moment you question the veracity of the overarching story, and you feel like you're inside the tavern alongside the drunkards.
So it's a lot like the author is toying with your suspension of disbelief - redirecting it from the overarching story to the nested stories, and as you doubt the later you get even more immersed into the former.
If I must use an example of media within media, then my choice would be "The Book" within Orwell's 1984. I think that it's a great piece because it shows Orwell's views on politics and society, while still serving narrative and worldbuilding purpose - for Winston it's a material proof of the Inner Party's bullshit, for O'Brien it's a tool of the Inner Party to sniff out dissidence. (Note: 1984 is extremely misrepresented nowadays, I'm aware, but I still like it.)
Most modern adaptations present the stories Odysseus tells while visiting the Phaeacians as if they were the actual plot—but Homer’s audience would have known Odysseus as a notorious liar and trickster and wouldn’t necessarily have regarded his stories as true even within the context of the frame narrative. Homer’s epic focuses as much on the parallel stories of Telemachus and Penelope—I read the underlying story as their struggle to untangle Odysseus from his own web of deceptions and fantasies and bring him back to reality.
I haven't finished the book, but I have to give it to the "Navidson record" in "House of leaves".
House of leaves is a book about a guy who finds a manuscript about a movie that doesn't exist. So there are multiple layers on the narrative, from near to far you have:
The editor who's editing the book
The writer of the book (Johnny) who tells his story and what he finds in the manuscript
The person who wrote the manuscript (Zampano) and his views on the movie
The documentary "The Navidson record" which the manuscript is describing. Filmed by Navidson (who's, as far as Johnny can tell, a fictional character in a fictional movie that never existed)
The reason why I have to give it to that particular piece of media within media is that everyone else in the book is a pain in the ass that feels that you have to drag yourself to in order to get to the next chapter of the Navidson record. So in a way it's a fictional media within a fictional media that's better than the fictional media it belongs to.
And in case you haven't heard of house of leaves, I'll leave you with a page from the book:
"The Deb of Night" radio show from Vampire: The Masquerade - Bloodlines is consistently hilarious and a great way to relax between the more horrific parts of the game. Bonus points for one of the regular callers guessing the plot of the game by complete chance and one of the main villains calling in to threaten whoever might be listening.
Sweet Bro and Hella Jeff from Homestuck. Although it actually predates Homestuck and was retroactively converted into media-within-media, does that still count?
"S." by Doug Dorst is in itself a fake novel, where the "real" story takes place as handwritten notes in the margins to form the complete story, the fake novel itself just a prop. But reading the novel-within-a-novel-that-is-the-novel "Ship of Thesus" by itself is an interesting short surreal read.
Seven on 7 is a series of TV news shorts and commercials from The Boys universe. It's a delightful little parody of Fox News. The whole series is available free on YouTube.
Watched Asteroid City recently for the first time. I thought the play within the movie (and the intertwining back and forth of storylines) was really interesting and entertaining.
The poems of Thomas Zane in the old gods of asgard concert in the book about max Payne in the video game Allen wake in the video game control in the amazing TV series the threshold kids in that song the janitor is singing.
Station Eleven from… Station Eleven is probably there only one that’s been as interesting to me as the story itself, I guess because it’s such a big part of the story and character motivations. The book and show are both good in their own ways, but I particularly like the passage repeated throughout the show:
I remember damage, then escape
Then adrift in a stranger’s galaxy for a long time
This may not fit perfectly into the that category but i think it's cool how Lazarus Jones exists in the media in some capacity in most of the GTA games. One of the best threads of continuity throughout the series.
Inside the 90s anime Martian Successor Nadesico, there is a 70s-era anime called Gekiganger III. Characters various levels of knowledgeable about, or fans of, the show. A single OVA episode was released in addition to the clips from within Nadesico.
King's Misery when there are several bits from the novel the writer is making to please his capturer seems like a classic at this point. More classic is the trope of Necronomicon-alikes in lovecraftian stories. But I prefer The Book of Mindfulness that a character from the Black Book sitcom accidentially swallowed and became a saint, even god-like figure.
Good Morning Glipglorp! From the Androids and Aliens podcast by the Glass Cannon Network. It was a random bit of world-building that the players latched on to and ran with and it turned into a whole episode.
As The Stomach Turns. It was a classic parody of soap operas on The Carol Burnett show, and as someone from that era i can vouch that it was a pretty spot on parody, at least from what i saw on tv when staying home sick from school.