The scenes with the humans, the moving toys (which are controlled by puppeteers) and the goblins (done largely with 'green screen' usage) are all filmed separately and edited together for the episodes.
The puppet character, Johnny Crawfish is a parody of well-known former talk show host, Johnny Carson.
The series had a similar premise to Shining Time Station (1989), a live-action, kid-friendly situation comedy, in which stop-motion toy stories were edited-into the episodes. Both shows were created by Rick Siggelkow.
It's implied that siblings Noah and Agatha are close in age (as it's mentioned that they were both little kids at the same time). However, off-screen, Sean McCann (born 1935) is eleven years older than Jayne Eastwood (born 1946).
It was decided to end after 66 episodes over the course of two consecutive seasons due to the fact that the show could get too stale and the child actors would start aging much.