THE FABULOUS jewels of Dresden - now on view at the National Gallery of Art - did not always lie hidden from the light in dark underground vaults behind a secret door. There was the time when the jewels, like solidified sunshine, lighted the way for the rulers of the kingdom of Saxony.

You have to imagine the German court scene in the 17th and 18th centuries: the great vaulted banqueting chamber, the vast table set with a feast of spun-sugar fantasies and whole oxen, deer and suckling pigs, each richly ornamented with fruit, bows and sauces.

Incredible non-edible objects were interspersed as centerpieces, or holders for sweetmeats, to enliven the long day and night of drinking and eating. Mythical figures, exotic savages, architectural models, fabled beasties - all were summoned up by the genius of the goldsmith. These marvels were made from the treasures of earth - gold, silver, diamonds, emeralds, rubies even rhinoceros bones and ostrich eggs.

Into this court chamber would stride the royal guest in his finest armor, with his diamond-handled sword in its diamond-studded scabbard. He would wear diamonds for waistcoat buttons, in his belt and shoe buckles, hat bands and badges.

The king would greet him with a Willkomm cup. Perhaps the cup was in the shape of a castle made of silver, with the lip in the tower. Or it might be of carved rock crystal shaped like a boat, or a silver-gilt animal. These were rough times, when men prided themselves on their appetites. The drinking vessel might hold a half gallon of wine. And the guest would drink it down in one great gulp - unless his host had provided him with one of the trick cups that fed first a little, then a lot. Drinking from one of these would cause great uproars of laughter.

In the National Gallery exhibit are a drinking vessel in the shape of a basilisk (of shell, silver-gilt with a trace of paint); a cup with a bust of an African woman (agate, silver-gilt, diamonds); and one in the shape of an elephant with a castle on his back (silver-gilt, mother-of-pearl, emeralds, rubies, one sapphire).

The rose-cut diamonds of the Saxon court dress glitter like so many galaxies in the exhibit case. Because they were objects of fashion and therefore often recut and remounted, the Dresden set it believed to be the only surviving garniture with the rose-cut diamonds. After the late 17th century, diamonds were cut in "brilliants," a shape that gives more facets for brilliance but is less interesting.

The precious objects on loan to the National Gallery of Art's new East Building (along with other splendid exhibits of armor, paintings, porcelains, ancient curiosities, bronzes and drawings are but a tenth of the collection of the Dresden treasure chambers.

The Kunsikammer - cabinet of curiosities - was formally begun in 1560 by the rulers of Saxony, a rich East German kingdom that only became part of a united Germany in 1918. The heyday of the Elector of Saxony (so-called because the ruler was one of seven German kings who elected the Holy Roman emperor) came during 1697-1763 when the elector was also king of Poland. The idea of a chamber of wonders - paintings, animal skeletons, minerals, tools, architectural sketches, dinosauer bones - spread among the well-to-do intellectuals. Thomas Jefferson, for instance, after his European tour, in the late 18th century, established a "Wunderkammer" in his great hall at Monticello. Charles Willson Peale's collection, of about the same period, eventually opened as a public museum.

A treasure chamber called the Green Vault was constructed in the mid-1600s in the west wing of the Dresden palace. The vault's only door was concealed in the walls of the king's quarters. The walls were painted the Saxon national color, thence its name.

The Green Vault was enlarged, remodeled and opened as what is claimed to be the first museum of the decorative arts in 1973 by Augustus the Strong, the Saxony elector who reigned from 1694 to 1733. Each precious material had its own chamber. Ivory and amber were set against marble. Silver was set on a red background and gold on green, and both were reflected in mirrors. Jewels were displayed on black velvet against glass walls and pillars decorated in gold, blue and red. Bronzes were exhibited against oak paneling.

Most of these objects were actually used at one time, according to Joachim Menzhausen, director of the Green Vault, who came to Washington to help install the National Gallery show. He pointed out the coffee urn with stand by Johann Jacob Irminger, who became goldsmith to the court in 1687. Irminger's urn ia a simple, pure, classical revival. But the ornate Neptune and Amphitrie handles and the sea creatures on the bowl, designed by Balthasar Permoser, turn it into a wild fantasy.

"Coffee had just been brought to central Europe by the Turks. One of the first coffee houses was in Leipzig in 1618. So the craftmen had to find a new shape to serve the coffee. In this one, if you look carefully, you can see there is a tiny spout here, in the mouth of the fish. If you twist the fins, the coffee comes out. Notice that the base is dish-shaped so not so much will spill out. Obviously this design was not counted as too practical."

Menzhausen said the great Saxony court had all sorts of amusements and diversions. "For instance, a target. When you hit the bull's eye, it would set off a firework rocket."

Augustus the Strong liked jokes. In those days, it wasn't always safe to play jokes with royalty. You might turn your head and find it fell of. "But Augustus obviously enjoyed them. During his regime, there were many objects made with Hercules as the major figure. The Hercules was always understood as an allusion to Augustus. He was the busy lover of beautiful ladies," Menzhausen said. "One bowl is a figure of Hercules fighting with a lion. A mirror is mounted behind the figures so you can see the bare backside of Hercules (actually a great pearl), his clothes torn off by the lion."

One display case is full of jeweled miniatures. The tiny peddler (13 centimeters) is made of baroque perls (the irregularly shaped one), gold, silver, colored stones, enamel and diamonds. "If you pull out this larger diamond in the center, you'll see that it's the knob of a drawer. In here, the lady owner kept powder for her fingernails or some such," Menzhausen said.

Most of the other objects in the case - the dwarf with musket (baroque pearl, gold, silver, enamel and diamonds) or the dancing dwarf (monstrous pearls mounted in gold and silver, enameled, with diamonds) are hardly larger than one's hand.

The Dresden museum has 50 of the early 18th-century jeweled miniatures, many more than exist anywhere else, Menzhausen said. "In the late 18th century there were many copies, made, I believe, in Paris. One is now on the English market. Some are in Munich. But no one else can do them properly. They do not have the craftmanship. The Dancing Dwarf, for instance, is the highest level of the jeweler's art."

The cup with stem in form of Moorish girl, by Johann Melchior Dinglinger and his brother Georg Friedrich, was one of the many objects made to be used as centerpieces on a banquet table.

The Dinglinger figure, a caryatid (a female form used as a column, a support), and its bowl are both made of rhinoceros horn. The horn was considered a great aphrodisiac. The figure is draped with gold. The bowl is garlanded with diamonds and topped with a dragon. The dragon holds in its mouth a badge of the Danish Order of the Elephant - awarded to Augustus at an early age because his mother was a Danish princess. Dinglinger wrote the King that it it took him and his brother eight years to make "this curious and precious piece." Another larger Moorish figure of pear wood and tortoise shell, richly ornamented with silver-gilt and gems, holds a hunk of emeralds still within their native rock.

Four shields with the arms of the Saxon provinces (early 18th century) hang on the walls. The copper was originally fire-gilded. "They were framed as doors for the oak cabinets in the Green Vault," said Menzhausen. "But most of them were melted down in the fire following the (World War II) bombing of Dresden. These four, however, were saved, but all the gold was lost in the heat. When we were bringing them over here, I had trouble finding a goldsmith who could fire-gild them - the electro-planting method would have been too flat. Finally I found the man. And a disaster! The first one soaked up gold as though it were a sponge - 40 grams. We found they had become very porous, probably because of the heat. For the rest, we first coppered, then gilded."

The sort of entertainment at which the objects would have been used can be seen in the great paintings in the show devoted to court festivities in Dresden under Augustus. The most opulent is the Great Garden with Festive Illuminations in 1719 (by Carl Heinrich Jacob Fehling) with its temple of Venus for a royal wedding, and beyond, gondolas and barges.

The baroque Zwinger (shown here in a painting by Bernardo Bellotto, who also is known as Canaletto) was designed by Matthaus Daniel Poppelmann, of Italy and Vienna. The Zwinger - six pavilions connected by arcaded galleries around a great courtyard - was built between the Residenzschloss and the old fortifications, 1710-1732. It was used for the royal wedding of Crown Prince Friedrich Augustus of Saxony and Maria Josepha of Austria. The festivities went on for 28 days.

Another painting (by C. H. Fritzsche) shows the firewoks on the Elbe, June 6, 1709. The festivities honored the Danish king. An elaborate construction, representing the fortress of Ryssel (Lille) in Flanders - topped with a tower decorated with a crown and the Danish order of the Elephant - was built on a fleet of boats. Rockets and cannons were fired at it from boths banks. And it, in turn, fired back.

Menzhausen himself was not born to the palace, though one might say he is now much at home there. His parents were merchants. His mother was Jewish. During Hitler's regime, they had a very difficult time, culminating in his parents being sent to a concentration camp. Menzhausen was fortunate enough to be taken in by a professor of theology in 1945-46." And because I was half Jewish, I was not thought good enough to fight for my country." Many of his 15-year-old friends were killed in the last days of the war.

Afterward, Menzhausen went to the University of Leipzig, and graduated with a degree in art history at just the time when the art objects were sent back from Russia, where they had been taken during the first occupation of East Germany. "There were not many art historians left - there were not many people left - and I, like many of my generation, found myself early put into positions we would not have expected. I was only 30 when I was made director of the Green Vault. I knew little about them when I began. But the collection molds people to it, as the wood molds the carver. I wouldn't give such a job to anyone as young and inexperienced as me, but those were different times."

Today Menzhausen is a sturdy-looking man of 48 with wavy hair. His English is very good - he can urgue the wording of a label in English with the best - but his German accent is like a good thick gravy over it all. He came over to the United States with the collection and wrote much of the splendid catalogue, "The Spendor of the Dresden." He's now back in East Germany, without, he lamented, having seen much of American art, only what he brought with him.

In 1978, Menzhausen says his galleries, like the National Gallery, are deluged with people, all wanting to see the art. "Today, the interest in art is an international phenomenon."

"Is that jewelry over there set with crystals," asked the man who had pushed his way through the crowd at the National Gallery.

"No," said Menzhausen politely, "they are diamonds."

"Imitation diamonds, I'll bet," said the Doubting Dan.

"No," said Menzhausen patiently. "They are all real."

"I doubt that," said the man, shaking his head and leaving. "If they were real,you'd have to have guards so thick around them you couldn't see them."