Nell and the grandfather walk out from the house, wandering without any exact destinations. Despite living aimlessly with barely no income, they feel happy and free. Destiny then brings them to have landed in a churchyard where later on they meet a group of puppeteer led by Mr. Harris, known as Shorts, and Mr. Codlin.
Nell and her grandfather are then invited to lodge in the place where they also reside for one night and since she and the grandfather have no clues on their goals they follow the footsteps of Shorts and Codlin. But somehow Shorts and Codlin start fighting for Nell’s attentions, making the 13-year old feeling insecure. She is afraid that the two know the story behind their escape. And Codlin begins protecting the two guests, too. This makes Nell and the grandfather plans separating from them and they finally do that.
Meanwhile, Kit gets a job as the caretaker of the horse belonging to the Garlands family. Then, Daniel Quilp hires Brass Simpson to handle the debt and the property of the grandfather. Back to Nell, they resume their journey then drop by in a house that also serves as a school run by an old man. This man is the teacher and also the headmaster of the school which teaches some nearby kids.
Nell quickly impresses the teacher and they stay at the house. During the very short stay, Nell goes inside the class and sees the teaching process. This girl even accompanies the teacher to visit his dying student whom, according to his parents, can’t help feeling stressful with all teachings. Nell entertains the dying kid but his life is so short. He passes away, leaving Nell a very gloomy feeling.
The duet goes on their trip again after parting with the teacher. On the road, they encounter Mrs. Jarley, who knows Nell’s face when they are still with the puppeteer group. In short, Nell and the grandfather agree to work for the lady in her work-waxing shows, stay with her and travel with the caravan to perform work-waxing shows according to requests.
Although Nell and the grandfather do get rid of Shorts and Codlins, Daniel Quilp apparently still hunts them. One night, Nell is almost caught by the dwarf. Thankfully, he doesn’t see her and so Nell keeps her watchful eyes that somewhere Daniel Quilp may just find them.
Mrs. Jarley is so fond of Nell because she is such a fast learner. She learns the names and the stories behind each and every working-wax figure accurately. Also, she wins the hearts of so many visitors of the show because of her appearance and attitude. So charming that some women envy her.
One night, the two take a stroll but are then caught by a heavy rain. They then decide to take a shelter in front of a house and entertainment place. Not long after that, the caretaker of the place comes out. A loud noise is heard from the inside. The grandfather immediately suspects that a gambling is ongoing. He insists wanting some money from Nell which, although she refuses in giving it, the grandfather places it on the gambling table, eventually.
The grandfather loses all the games and all the money. But he never gives up. He argues that he does it all for the wealth of the both, something that saddens Nell even more. But the clock almost strikes at 12 midnight and the two decide to stay in the hotel. Nell changes the gold to pay the rent. She now bags a good sum of money which is so shocking that the large sum of it is stolen by her own grandfather!
She can’t believe that the figure who creeps into the room in the hotel is her very own grandfather who seems fine to have learned that the remaining money is gone. In the morning, they return to the Mrs. Jarley’s place and not long after that the grandfather gets back to doing the thing that steals their joys away: gambling.