Here the PC’s are instantly turned into puppet versions (aka Muppets), made of soft felt and filled with stuffing.
The Domain appears to be a small village but every, single, creature and thing is made of fabric, wool and stuffing and has googly eyes making them a living puppet. It’s basically being stuck in The Muppets.

The PC’s have the uncomfortable feeling of being puppeted by a hand up their you-know-what and their arms and legs are attached to sticks causing them to move and act like a Muppet!

This was especially weird for Strahd who on visiting the Domain with Daniel starting having the strongest urge that on saying a number it would be done loudly followed by AH! AH! AH!

The Dreadlord of this domain is a hand puppet who introduces himself as Happy Chappy. A creepy hand puppet that is overly jolly he is willing to make a deal with the party to escape the domain on promise that they track down and bring him his beloved Lufe’ -.a female Seasonal Eladrin with pink skin and green hair who he insists was wrongly taken from him.

Strahd had no issue making this deal – after all he knows all too well the pain of being separated from your true love! However he agreed to the deal without actually asking who Lufe’ was, what they looked like and how to find them.