I'm not surprised at all. Real always plays worse than top teams. The problem is that they are almost always lucky, especially in the knockout stages of the Champions League, which is why they have the number 15 on their shirt. I remember very well all their victories in the Champions League from the 10th to the 15th victory, and only one of these last 6 victories, they were truly the best team in terms of quality of play.
They get outplayed a lot but they are always clinical and have the ability to get it done in both boxes, especially the attacking box. In between the boxes though they've always been pretty average, even when they had world-class midfielders.
What they are good at is creating chances in rudimentary or simple ways e.g. crosses or simple passes through the lines after the other team commits.
Teams do miss a lot against them. I have said for years now that their style is reminiscent of a miles better Man United.
I agree with your comments.
Edit: As serghei says, self-belief and tenacity goes a long way for them too. They win a lot and it becomes a feedback loop or self-fulfilling prophecy. Winning creates a winning mentality and hence more winning.