In Fairy Tale Land, a clumsy fairy-in-training is cautioned by the Blue Fairy to guard her fairy dust carefully. As the two fly off, the clumsy fairy spills some of her dust, which finds its way into an underground hatching facility. The dust causes the egg to hatch early, revealing the dwarf we know as Grumpy.
Leroy, the town drunk, eats breakfast in Granny's Diner when Mary Margaret walks in to announce the need for volunteers for Storybrooke's annual Miner's Day festival. she gets no takers to help sell candles to support the town's convent.
Mary Margaret explains to Emma about the Miner's Day tradition and how all of the volunteers left the committee because of her affair with David. Emma gets a call and rushes off.
At the town hall, one of the nuns prepares a banner, when she knocks her paintbrush off a ladder and onto Leroy's head. She introduces herself as Sister Astrid; Leroy helps her fix an electrical problem with the fairground lights. She compliments him on his skill, but he explains that what he really wants to do in life is sail. Astrid tells him he can do anything if he can dream it.
Emma investigates the scene of Kathryn's accident when Sidney shows up looking for a scoop. Sidney offers to get Emma Kathryn's phone records to help with her investigation when David shows up.
After the dwarf hatches, an attendant explains to him that he's a dwarf and that he cannot fall in love, get married or have children. He's meant to live the life of a miner along with his seven brothers. He is given an axe with the name "Dreamy" on it.
At the elementary school, Mary Margaret prepares for the fair when Leory arrives to sign up to help. Astrid discovers that she's made a serious mistake on the supply ordering for the fair, ordering too much helium and spending the month's rent money. She tells Leroy that Mr. Gold will evict them if they miss their rent. Leroy tells Astrid he'll help sell all the candles so they'll be able to pay their rent.
Emma asks David for information on Kathryn's accident, but he appears to know nothing. He admits speaking to her the previous day, but says he hasn't seen or heard from her since.
In her office, Regina prints out Kathryn's "phone records" and calls Sidney to tell him they're ready for him to deliver.
Down in the mine, Dreamy shovels stones onto a conveyor belt, where they are ground into fairy dust. The clumsy fairy tries to stop the flow of dust but has trouble and calls out for help. Leroy runs to shut off the flow at the last second. The fairy thanks him, but moments later she places her sack of fairy dust on a piece of equipment headed for an incinerator. Again, Leroy saves her. She thanks him, introducing herself as Nova. She wants to be a Fairy Godmother someday, and Dreamy tells her she can do anything as long as she can dream it. She invites him to watch the fireflies with her soon.
Mary Margaret and Leory try to sell candles at a booth, but have few takers. Leory suggests going door-to-door, thinking that Storybrooke residents will pay them just to go away, but the idea backfires and they sell nothing.
Emma tells Sidney that Kathryn never showed up for registration at the law school where she was accepted.
At the tavern, Dreamy tells his fellow dwarves that he's feeling ill, but Belle (who magically appears out of nowhere?) tells him that he is probably in love. She tells him that he needs to be with the person he loves.
Leory tries to tell Astrid what really happened with the candles, but he is reluctant to disappoint her and instead tells her that they sold all of them, thereby saving their convent.
Mary Margaret is furious and wants to know how they'll come up with $5,000 to make up the debt. Mary Margaret catches on that Leroy likes Astrid, even though she's a nun.
Dreamy arrives to watch fireflies with Nova. He tells her they could explore the world together and she agrees, planning to meet him the following night to run off together.
Leroy tries to make a deal with Mr. Gold to sell his boat for $5,000, but he's not keen on it. Leroy asks him to simply forgive one month's rent for the convent in exchange for the boat, but Gold refuses. He dislikes nuns due to what he cryptically describes as "a long and complicated history with them." Astrid arrives with a pie to thank Leroy when she finds the unsold candles he'd tried to hide from her. She leaves, disappointed.
Sidney arrives at the police station with the doctored phone records and tries to convince Emma that David was lying about not having talked to Kathryn immediately before the accident.
Leroy finds Mary Margaret at Granny's Diner and reports his lack of success.
Dreamy attempts to sneak out of his cottage, but he's stopped by Stealthy. The dwarves awake and Dreamy shares his plans to be with Nova. A mine supervisor stops Dreamy as he leaves, telling him that as a dwarf, he's not capable of love. The Blue Fairy arrives and tells Dreamy that if he and Nova run away together, she will lose her wings and will never become a fairy.
Leroy tells Mary Margaret that Astrid was the first person who ever told him he could do anything and that's why he pursued her even though she was unattainable. He tells her to hold on to the good memories she had with David, even though she is feeling sorry for herself now. Suddenly, Leroy has an idea and rushes off. Mary Margaret finds him standing at the top of a building overlooking the fairgrounds. He doesn't jump, but instead destroys the electrical box with a pickaxe, plunging the grounds into darkness.
Dreamy meets Nova as planned, but explains to her that he can't go with her because they belong to different worlds.
When Dreamy returns to the mine, he breaks his axe. When he's handed a new one, the name on it changes to "Grumpy."
Leroy and Mary Margaret sell all the candles to the crowd at the blacked-out fair. He takes the box containing the $5,000 to Astrid. He says he's going to fix up his boat and take her sailing someday.
Emma scrutinizes the phone report when Regina arrives demanding news about Kathryn. Emma refuses to release any information so early in the investigation. Regina threatens to replace Emma if she's found to be covering for someone.
As Mary Margaret leaves the fair, Granny approaches and lights her candle. She leaves the fair, head held high.
Emma arrives to take David back to the station for questioning.