It consisted of a Wizard, played by Neil_Innes and a puppet dragon named Toby. It also starred Richard Robinson and Kate Lee.
The Wizard would tell stories to Toby through moving his finger around in a puddle, or a cauldron, or the water barrel outside. (Both the cauldron and the water barrel could talk)
These stories would be narrated animations, and would be continued on the next couple of episodes.
There was also a series of books made for Puddle Lane, based on the animations. These books were published in 1983 by Ladybird Books. Number 10 in this series is Magic at Midnight, written by Sheila McCullagh, and illustrated by Tony Morris.