Two children, Olive and Rex, are traveling in a remote part of Germany with their uncle and aunt. While waiting at a village inn, they discuss their favorite items from a china factory, particularly blue dwarfs. Olive believes she sees a real dwarf in the village, prompting Rex to wonder if real dwarfs exist in the nearby forests. Their aunt humorously suggests that if they encounter dwarfs, they should be polite. After their uncle arranges a carriage to continue their journey, they set off through a large pine forest. When their horse requires shoeing, they must stay overnight at a small inn in the woods. Olive, eager for adventure, decides to explore the forest alone while the others go for a walk. She wanders deeper into the woods, imagining the blue dwarfs, and eventually sits down to rest. Suddenly, she encounters a group of blue dwarfs, who invite her to their village for supper. Olive is both excited and apprehensive, but she follows them, donning a blue cloak they provide. The dwarfs lead her to their village, where she marvels at the tiny houses and the dwarfs' antics. However, she soon realizes she is clumsy in their world and feels out of place. As she prepares to join the dwarfs for supper, she bumps her head and wakes up back in the forest, realizing it was all a dream. Confused and frightened, she struggles to find her way back to the inn. Just as she begins to despair, she encounters the same dwarf she saw earlier, who helps guide her back to safety. Upon returning, Olive learns that her family was worried about her. She reflects on her adventure, deciding that while the idea of dwarfs is enchanting, she prefers to enjoy such tales in books rather than seek them out in reality. The story concludes with Olive sharing her experience and realizing the warmth of home and family.
By Mary Louisa Molesworth · First published 1891 · Genre: Fantasy, Children's Literature, Adventure