Clap Your Hands If You Believe: The elfs that Nikolas run into at the top of the mountain show him that magic is basically all about believing in thing. So, the Elf village will only show up to those who believe it exists. Nikolas is also able to teach a mouse to talk and a give the ability to fly to a reindeer simply due to believing in it.
Narrator All Along: It's eventually revealed that "Aunt Ruth" is actually the truth fairy.
