Many within the industry of "Golden Age" Hollywood, from the studio executives on down to the creative "little people," were of Russian or of Eastern European origin. This short reflects their tastes in children's entertainment, where naughty or mischievous children are punished or otherwise scared to death through the telling of some wild folk tale. An unusually placid and sober band of Russian Gypsies sing and dance, and the kindly old toymaker offers to share the magic of his wooden (well, paper mache) toys with two sweet little boys. The dolls begin to sing, and by the time the torn up, broken dolls began to break out into song my 10-year-old daughter said "Dad, this is creeping me out." The two boys later share a devilish nightmare to similar effect. Folks who love Tim Burton's "The Nightmare Before Christmas" will really enjoy this, though you may want to consult Lazlo Moholy-Nagy's "Gypsies" (1933) to get a real taste of the non-Hollywood gypsy experience. This short is in two-strip technicolor, and in technical terms looks like something that could've been produced five years earlier.
