The film definitely satirizes the medieval time period and Arthurian legend in such a crude and iconic way that holds to why it is such a comedic classic. Usually in the media that portrays these stories, the tone is very serious as it lays down this deep and rich history, but the film exaggerates these tropes to such a point where you have no choice but to laugh. It pokes fun at the type of government they are under, the insane amount of violence during this period, and even mystical beasts. I think one of the reasons they may have chosen to satirize this period is due to the 1970’s becoming more relaxed, and the general population seemed to step into representing themselves more with funky fashion trends and work strikes. This film may have been a way for people to look into the past with a sense of humor and realize how far they had come, or just some random guys wanting to spill fake blood everywhere. I also think that although the film is somewhat critiquing chivalric code because it is a satire, I don’t think it goes much deeper than that, at least not on purpose. For example, the scene with Castle Anthrax may reasonably seem like a random throw away scene, but could also be turned into a light commentary on gender roles back then since it is a castle full of women who just sit there and don’t really have a purpose except for waiting on a man. That may have been an accident though.
For Monty Python, I certainly think it's fair to think that they had some desire to "spill fake blood everywhere" but I think there was a lot of cultural things in fantasy that were happening around that time that probably helped to spur it. For example, the first edition of Dungeons and Dragons was released prior. Around thirty years before Holy Grail was released, Tolkien and Lewis started to give fantasy new legs in terms of what it could accomplish as a genre. Python has a tendency to deconstruct British culture in all of their works, so I imagine, just from that, that they had noticed some effect that fantasy and legend had started to show in the public sphere and they grabbed onto it with full force.
I love the language of “relaxed” you use in this passage, I think that is a great way to capture the essence of this film. Most modern medieval pieces tend to take themselves too seriously and focus on the violence and systems of the era. Meanwhile, this film still manages to do that by making it more relatable for all types of audiences by taking a comedic approach to the topic or chivalry.
The point you make about the 1970's is a good one I think--especially as you point out it was a time in which people were becoming more "relaxed," which from your reference to both fashion and strikes I take to mean not just that people were becoming more chill but that they were invested in relaxing and reshaping social norms. This actually reminds me of discussions/points you made a few weeks ago about Arthurian literature and its connection to imperialism. If Arthur is a symbol for traditional Britain, or indeed, traditional white, european social values and norms, than it seems rife for a little relaxed satirizing.