Pudgy the pup takes Betty Boop's advice ('Go Out and Make Friends With the World') to heart and befriends various wild animals.
A mole lad with sensitive vision is allowed outside to play in the daylight on the condition that he stay close to home. Outdoors, he meets a traveling sales-skunk.
A conductor, in silhouette against sheet music, leads the title tune, which dissolves into a series of placid landscapes. As the music picks up, we see a water wheel, then a dancing fairy emerges from a whirlpool and begins singing, to the delight of small woodland creatures. The birds awaken sleeping cherubs, who begin their work of harvesting all things blue and adding them to the river. The birds even do their part, harvesting the color blue from the rainbow. Everyone tugs to open a floodgate and unleash the cerulean waters. A swan, festively decorated, leads a gondola of sorts lit by fireflies.
Bunnies, turtles, and other small woodland animals play. A child skunk remains apart, heartbroken that he has no friends.
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