Oswald is a toymaker with his own shop - or, as the title would have you believe, shoppe. He makes all his own toys and the little children like to gather and sing songs about him. It's a fine existence, except for a mouse that does mischief. It's probably a spy for that Other Walt. When the day is done, and he shuts the shop, and goes upstairs to sleep, the toys come alive and cavort.
It's a fine idea for a show, as anyone who has ever seen THE NUTCRACKER SUITE performed can tell you. This sort of cartoon, in which the goods in a store come alive at night was becoming popular. Over at Schlesinger, variations would be made until after the War, although there they concentrated on brand recognition, or book titles. This one is more about cuteness, and it does it pretty well.