The description is not quite correct.  In this episode, it is revealed that Mary Shelley based "Frankenstein" on an older German legend, and it is this older legend that is commemorated in the story.  (In fact, this older legend was invented for this episode.)  The 400-year-old legends states that the evil Baron Von Frankenstein was killed on his castle grounds 400 years ago by a mysterious creature who reappears every century to claim a new victim, but Frankenstein did not create this monster or anything else.

The idea of strange occurrences on a set of a monster movie, leading to the questioning of whether the monster is real, is an old plot device.  (I first saw it in a 1940's Batman comic.)  It is intriguing, if predictable.  Monster thriller; questioned supernatural elements.