Ok. Here's the deal. Dwarves in this show are hatched from eggs. Wearing clothes. So one day a clumsy fairy drops some fairy dust on an egg and it hatches a happy Dwarf. When the Dwarf is given his ax the ax names him "Dreamy." And off they go to the mines a whistling.
So in reality (or is it reality) the Dwarf is the town's mean drunk. He though finds he's in love with a nun. The nun being the clumsy fairy in the other world. The nuns need to sell a lot of candles or Mr. Gold/Rumpy will kick them out. So Grumpy and Snow White team up to sell candles.
Meanwhile in the fairy tale, Dreamy finds the fairy. They fall in love. But they can't be in love cause she'd lose her fairiness. So Dreamy does the right thing, becomes bitter and his ax renames him grumpy.
In the real world, Grumpy couldn't sell a candle to save his life. That is until the night of the festival where he takes a pick ax and takes out the power transformer. With everyone in the dark the candles sell like hot cakes and everyone is saved.
Wow. I am in awe of a show that has the freak on for a plot like this. I love Dwarves being hatched from eggs. It's a perfect fairy tale image. I hope the show continues to show such creativity.