During a visit to the Christmas market in her quaint town, eight-year-old Marian witnesses an astonishing scene: atop the carnival game booth's highest shelf, a remarkably cute stuffed teddy bear unexpectedly tilts his head and lets out a sneeze. Experiencing an immediate bond, Marian wishes fervently to claim him as her Christmas prize. However, when another person wins Teddy, he, along with his newfound hedgehog companion Bolla, must find a way to reunite with Marian and unravel the significance of family and friendship.

In this animated film, a puppet aspiring to be a hero forms an unlikely alliance with a discarded toy dog, embarking on a sequence of adventures. Despite encountering briefly precarious situations, the film maintains a light and comforting tone throughout.

Buddy, a regular-sized man was raised as an elf by Santa Claus (Edward Asner). When the news is finally broken to Buddy that he's not a real elf, he decides to head back to his place of birth, New York City, in search of his biological family.