I've come to the conclusion that it's possible Nanny lived in an apartment complex similar to where the Muppets lived in LTS and the Muppet parents let Nanny watch the kids while they went to work. Even when they stay overnight, Nanny could just be getting paid overtime to watch the kids so the parents could relax. And if you had a Muppet kid, I could definitely see why you'd want to have a break every once in awhile, LOL. You know, we never really get to see the closet much aside from Gonzo's imagination, but I'm willing to bet that there's a Fraggle Hole in there. The magic of Fraggle Rock would explain a LOT. It's definitely a portal to imagination, at least.