Susan goes to a sawmill with David, who explains how gnomes cut down dead trees to make furniture and birdhouses. Susan gets bored and goes for a ride on Swift with a little boy named Tom.

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A poor woodsman saves Lisa after she is attacked by his cat. To express his generosity, David grants the woodsman three wishes, which do not go as planned.

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David and Lisa travel to Siberia where David is called upon by the gnome king. The king wants David to stop a mean gnome called Ivan, who is stealing furs from the human hunters and giving the gnomes a bad name.

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David and Lisa journey to Holland to help some farmer gnomes. It is raining heavily, and there are dozens of rabbits trapped on a small island in the floodwater. The gnomes build rafts, and with the help of Swift, they save the rabbits from drowning.

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David remembers a time when his children Lily and Harold were kids. Lisa realized the milkwoman had not delivered milk that day, and she knew something was wrong. David and Harold and Lily decided to go to town and see the milkwoman.

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David and Lisa are summoned to the palace of King Conrad. The king lived behind a waterfall and had a jester named Tim. King Conrad tells the gnomes he wants them to go to the island of Mentoa and find the valuable shadowless stone.

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David and Lisa learn that a hunter is in the forest trapping birds. The man even caught David's friend, the flycatcher. While Lisa tries to feed the flycatcher's family, David rides on a raven to the city.

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David meets up with his friend Cosmo, who says he is worried about the bats in the forest.

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David and Lisa go to a birthday party in a windmill for a David's nephew, Maxmilion. The farm has three friendly cats and one big mean black cat named Tom.

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Susan is staying with David and Lisa and finds a gnome xray in an old trunk. It is an xray of the Australian Prince Rex, who just happens to be coming to visit David that day. David tells Susan about how he and Lisa went to Australia a long time ago.

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David and Lisa go for a walk in the forest and meet a wolf. The wolf tells David that his wife and one of his cubs ate meat that had been poisoned by a sheppard. The wife had died, but the cub was still holding on. David examins the wolf cub and determines that a certain plant can cure him.

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David goes to see an old friend of his, a human doctor named Walter. David wants to give Walter a pocketwatch that has been in the gnome family for generations. David tells Walter a story about the time he let a human boy enter the world of the gnomes.

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David and his wife Lisa must go off into the mountains because it time to die. They know they will not live past 400 years old. David finishes writing his journal about the gnomes. He and Lisa are visited by an Arctic mouse, who is carrying a message from their old friend Casper.

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