This a wonderful book that, in a way, could be called a fantasy of manners. The story is about a small city bordering with Fairyland, something which the citizens pretend doesn't exist since the merchants too control of the country. The tranquillity of the town gets turned upside down when some people are found partaking of fairy fruit, and odd happenings start popping up all around Lud. It will take a very peculiar sort of hero - the old, plump and very respectable mayor of Lud-in-the-mist - to settle things right again.
Not only Mirrlees' writing is a delight to read, but the story moves in a quirky and unexpected way, not yet tied down by the fantasy tropes that we'll come to know. Hidden beyond the novel is also a burning satire on the contempt that proper society held for fairy tales, and fiction in general, and tells us how instead fantasy is a vital part of life that just cannot be shut off - themes that will be touched again by Tolkien decades later in On fairy stories and Smith of Wootton Major.
I discovered this book via Neil Gaiman's recommendation on Twitter, and in retrospect it shows the influence this book had on his works, especially Stardust.