AYes, the movie breaks the Fourth Wall (http://en.wikipedia.org/wiki/Fourth_wall). The complicated point is that the film itself deals with layers of truth that must be understood in order to get the full meaning of the film (NOT the book). Keep this in mind. Note that every single time the expression "boundaries of Fantasia" is said, it refers to the Fourth Wall between Fantasia and Bastian's World. When Atreyu is given the mission to find an earthling at the boundaries of Fantasia, his mission becomes to break the Fourth Wall to contact Bastian, who is the earthling that can give the Childlike Empress a new name (in order to save Fantasia). This is the1st time the Fourth Wall is broken. As Atreyu finds Morla, the Ancient One, Bastian screams in terror, so loud that he's heard by Atreyu, breaking that same Fourth Wall the 2nd time. When Atreyu looks thought the mirror of truth, he sees Bastian reading the book, who gets scared by the text describing the whole situation, breaking the Fourth Wall between the aforementioned realities the 3rd time.In the point when G'mork finds Atreyu, the beast addresses a pretty dense philosophical speech, dealing with the relationship between the human imagination, Fantasia existence and the source of final power over a man: As long as a human can imagine, dream and hope, Fantasia is infinite, and such human is harder to control, therefore he/she has the power to control his/her own adventure, in other words, live his/her own life. Given this, if the dreams of a human cease to exist, the Nothing will destroy Fantasia (the sum of a human's hopes and dreams), and as a direct effect, "people who have no hopes are easy to control", as G'mork says. Note that Bastian's father wants to suppress Bastian's dreams, and as consequence of his mother's death, he's losing his hopes, therefore, the three bullies have power over him. In such speech, G'mork is breaking the Fourth Wall by recognize the existence of humans beyond "the boundaries of Fantasia". This is the 4th time.Finally, when Fantasia is collapsing and the Castle is one of the surviving structures, the Childlike Empress first talks to Atreyu. Later, Atreyu is gone from scene and she begins to talk to Bastian (5th time the Wall is broken),BELOW IS THE ONLY TIME THE FILM ACTUALLY / TRULY BREAKS THE FOURTH WALL, BY LOOKING OUT OF THE FILM TO US, AT HOME, THE AUDIENCE, WHILST PREVIOUSLY AS MENTIONED ABOVE THEY WOULD BE BREAKING THE FOURTH WALL AS THEY ARE SPEAKING FROM A BOOK TO BASTIAN IN HIS REAL WORLD (WHICH IS THE DEFINITION OF BREAKING THE FOURTH WALL) HOWEVER AS BASTIAN'S WORLD IS NOT THE REAL WORLD, OURS IS THE REAL WORLD. SO NOTHING ABOVE IS ACTUALLY BREAKING THE FOURTH WALL. ONLY WHEN ATREYU SPEAKS TO US IN THE ACTUAL REAL WORLD IS THE FILM BREAKING THE FOURTH WALL.then again, and as the storm rages in Bastian's World (is the Nothing destroying his world too?), she mentions that someone, somewhere, is living the adventure through Bastian, a concept that once again escapes his comprehension. Note that at this point, she's looking directly toward the camera - towards you, who's watching the film! In this part, she's speaking to the audience, complementing what G'mork said earlier, but in a higher layer of truth, referring to Bastian's World as another extension of what could be called our world's Fantasia. The Childlike Empress is breaking the Fourth Wall between the film itself and our world.Once Bastian gave the Empress a new name, there is a short conversation on how imagination works. As Bastian understands it, he becomes the hero of his own adventure, free and valiant. The image of Bastian riding on Falkor is an invitation for us, the audience, to step out of the Nothing - it's an exhortation for us to have hope and live our dreams by means of a "dangerous book," as the Librarian said in the beginning of the film.
