It is about small wooden people called the Wemmicks who put golden star stickers and gray dot stickers on each other all day long. The golden star stickers go to the talented, well liked, smart, and beautiful Wemmicks. The gray dot stickers go to the chipped, scratched, and uncoordinated Wemmicks, and to those who cannot speak eloquently. A Wemmick, named Punchinello, is one who receives gray dots all day long and is very sad about it. It is affecting his self esteem and he believes that something is really wrong with him.
He meets Lucia, a Wemmick who is beautiful and talented, but has no stars or dots. Every time someone gives her a mark, whether a star or dot, it just falls off. When Punchinello asks Lucia about this phenomenon, she refers him to speak to Eli, the woodcarver. Eli creates all of the Wemmicks and lives on the other side of the hill. Skeptically, Punchinello goes to meet Eli, where he learns that he is loved and accepted, no matter what other's may say his faults are. Punchinello realizes that when he spends some time with Eli, who loves him unconditionally, the dots will not stick to him, because he is special too.