Afternoon of the Elves is that rarity in children’s literature—a delicate and complex psychological study of characters and relationships presented in a swift-moving, lively, and intriguing plot. The story focuses on the friendship between the sweet but unremarkable Hilary and Sara-Kate, whose unkempt appearance, temperamental personality, and mysterious family background have made her a social outcast at the suburban school that they both attend. Through her stories of elves and elfin ways, Sara-Kate introduces Hilary to the world of fantasy and magic; through her mercurial moods and secretive ways, she gives Hilary a glimpse of the ambiguities of human nature. When Sara-Kate’s tragic family circumstances are revealed, she opens Hilary’s eyes to the world beyond Hilary’s own carefully controlled and circumscribed family life. Sara-Kate initiates the friendship by inviting Hilary, her next-door neighbor, to look at an "elf village"—a collection of tiny houses made from sticks and leaves in a corner of her backyard. Hilary is immediately intrigued and listens eagerly to Sara-Kate’s explanations of how the elves live. Hilary’s two best friends, Jane and Alison, frown on this new friendship. They mock Sara-Kate’s shabby clothes and scoff at the talk of elves. Hilary’s highly conventional parents also express uneasiness at their daughter spending time in her new friend’s junk-strewn, poison ivy-infested backyard. Despite the warnings of her friends and family, Hilary is insistently drawn to Sara-Kate and the elf-village. "Put yourself in the position of the elves!" urges Sara-Kate, and Hilary gradually finds her perceptions of both nature and people sharpening. She exists in a state of perpetual expectation that the elves will appear and even speculates about Sara-Kate, whose odd ways and deep knowledge of elf lore suggest that she might be an elf herself.
The mysterious delight of the elf village is mixed with growing bewilderment as Hilary learns about her friend’s sad home life. She eventually discovers that inside the dilapidated house, away from the magic of the backyard and the elf village, Sara-Kate lives in destitution, caring as best she can for an incapacitated and reclusive mother. When Hilary accidentally glimpses Sara-Kate holding her frail mother on her lap as she sits in a rocking chair, she is so astonished by this scene, which is so foreign to her own life experience, that she at first assumes it is an elf-induced vision. Soon, however, Hilary realizes that the rocking chair scene is real. Hilary sympathizes deeply with her friend’s plight, so much that she accompanies her on a thieving raid of a local grocery store. Having gained Sara-Kate’s trust, Hilary is now welcome to visit inside the older girl’s house. One afternoon, Hilary’s mother comes looking inside the dilapidated house for her daughter and discovers Sara-Kate’s plight. This discovery brings the novel to an end, as Sara-Kate’s mother is hospitalized, Sara-Kate is sent to live with relatives in another state, and the house is repaired and sold to a more conventional family. Hilary consoles herself over the loss of her friend by transporting the elf village to a quiet spot behind her own garage, her hope in the possibility of elfin magic undimmed.