Uncle Statler and Waldorf bring over a train set similar to the trains used in the building of the Transcontinental Railroad, so the babies join them in recreating said railroad right in their own home.
When Nanny announces the water has been shut off in the neighborhood, the babies pretend to be superheroes such as Batman, The Wonder Twins, and The Teenage Mutant Ninja Turtles to get it back!
Kermit finds a lamp like the one from Aladdin, so everyone makes a wish, which backfires. Piggy asks to go on a cruise, Fozzie asks to be in movies (but ends up in Keaton's Cops), Gonzo asks for Piggy's kiss. Only Kermit can't decide.
Piggy's Alice in Wonderland book is due back at the library but she can't find it; Gonzo thinks goblins took it and the muppets try to make a new one before Nanny comes for it.
The kids keep making a mess no matter which game they play. Fozzie takes on the Three Stooges. Dr. Honeydew's invention can make people giant. Gonzo battles the Piggy Dough Girl. Indiana Kermit searches for Animal in the sewers.