The Doll's House

The overall plot concerns Dream picking up the pieces of his kingdom and existence in the wake of his imprisonment for most of the 20th century, and a machination by his sibling Desire.
Specifically, Dream tracks down several nightmares who fled his realm during his imprisonment, and also deals with a "dream vortex" that exists within a young American woman named Rose Walker. Dream knows that Walker, as the dream vortex, will draw rogue dreams and nightmares towards herself, or be drawn towards them. If left unchecked, Walker will eventually become the center of the Dreaming and cause it to collapse upon itself, and it is Dream's responsibility to kill her in order to prevent this from happening.
The Doll's House prologue begins with two men walking through a desert wearing "tribal" garb; one young, one old. The young man has just been circumcised as part of the ritual of becoming a man. The second part of the ritual is the telling of a story that has been passed down among the males of the tribe for generations. Each man hears it once, and each man tells it once (if they live long enough). Before the old man tells the story he asks the young man to find an object that he will know when he sees (which turns out to be a piece of glass in the shape of a heart).
The glass belonged to a building in a glass city that stood in the desert in which they walked many years before. The queen of this city was a woman named Nada who had fallen in love with Lord Kai'ckul (Dream), king of the Dream realm, after seeing him walking through her city at night. She proceeds to hunt him down and enters the Dreamrealm where she meets Lord Kai'ckul and tells him that she has fallen in love with him. He tells her that she may join him in the Dreamrealm if she wishes, but she refuses, telling him that no good can come from love between one of the The Endless and a mortal, then she leaves him. Dismayed, Dream follows her and convinces her to be with him, they make love on a hill overlooking her city. In the morning, a meteor strikes her city, destroying it completely (hence the glass shard). After seeing this Nada throws herself off of a cliff before Dream can stop her. He meets her in Grandmother Death's realm, and tries to convince her to come back and live in the Dreaming with him. After he asks her twice, and she refuses he tells her that if she says no again he will send her to Hell. At this point the story ends and when the young man asks about what happens to Nada afterwards, he is told, "What else could she do? She said no." In the narration, it says that the women of the tribe tell a different version, which is unknown to the males.
The story then shifts to the present, where Desire calls upon its twin, Despair, to inform her that there is a new dream vortex. On Earth, young Rose Walker and her mother Miranda meet her grandmother, Unity Kinkaid, a victim of the sleeping sickness that occurred while Dream was imprisoned. She was raped in her sleep and wanted to meet them, before she died. Although Miranda is unable to accept Unity as her mother (she was adopted quickly, and the scandal never gained publicity), Rose sees a resemblance.
Unity tells Rose to walk out of the room, so she can both comfort Miranda, and tell her the true story. When she's called back in, Miranda now admits to Rose that it's true. It's decided upon that while Miranda stays in England with Unity (who is slowly dying), Rose will hire a private investigator to find her brother, Jed Walker.
The investigator finds that Rose's father (who had Jed) is dead, and his exact location. Rose takes up residence in a boarding house full of peculiar characters, including Chantal and Zelda, an ambiguosly lesbian couple who always wear bridal garba and own a collection of stuffed spiders; Ken and Barbie, an extremely yuppie-ish couple; the eccentric Gilbert, a self-described "amateur knight errant;" and the landlord Hal, a gay man who performs at nightclubs in drag. Barbie appears as a main character in the fifth Sandman collection, A Game of You. It should also be noted that Zelda appears in the ninth collection The Kindly Ones. At night, Rose dreams of her brother, who is having his own problems.
Jed, it turns out, is now in the hands of distant relatives, who keep him locked in their basement, and have only continued this process because of the funding they receive for keeping him "safe". In his mind, he has become the pawn of a pair of Dream's escaped creatures, who have been using him to host a small dream dimension of their own. A previous, short-lived Sandman series created by Joe Simon and Jack Kirby in the mid-1970s is referenced in this volume. Simon and Kirby's Sandman was an otherwise unnamed hero who operated out of a place called the "Dream Dome," and was assisted by two grotesque "nightmare monsters" named Brute and Glob. Although Simon and Kirby's Sandman does not appear in Gaiman's story, several other elements of the series are referenced, including the Dream Dome (revealed to be a small and neglected corner of the Dreaming) and Brute and Glob. Simon and Kirby's Sandman has been replaced by Hector Hall, who had previously been a member of the superhero team Infinity, Inc. under the name Silver Scarab. Hall, who had been killed several months earlier in Infinity, Inc., and his still-living wife, Lyta (a.k.a. Fury), have become puppets of Brute and Glob, who are revealed as the two nightmares formerly under Dream's employ who have recently sought refuge in the dreams of Rose’s younger brother, Jed. Dream returns Hector to the realm of the dead and claims Lyta’s unborn child as his own because the child gestated in dreams for so long, saying he will eventually come to take the boy. Thus, Dream has, in Lyta's eyes, taken away her husband and threatened her child. Dream's attempt to explain the situation to her is hurried and incomplete, as he is now running late for an appointment that he is anxious not to miss, and makes no impression. This sequence of events will have a major effect on the series’ later chapters.
Dream's appointment is with a man named Hob Gadling, who was born in the 14th century. In 1389, during a discussion in a tavern, he declared that "death's a mug's game" and that he had no intention of ever dying. He is overheard by Dream and his sister Death; at her brother's urging, Death, amused and interested, grants Gadling immortality for as long as he wishes to live. Dream and Gadling meet once every hundred years in the same tavern, and over time the two become friends. In 1889, Hob had come to the conclusion that the only reason they kept on meeting was because they were lonely. Dream is furious, and tells him that he wouldn't befriend a mortal. However, by 1989, they have reconciled.
Meanwhile, Jed falls into the clutches of the Corinthian, an escaped nightmare of whom Morpheus had once been especially proud, who has taken to murdering boys and eating their eyes. The Corinthian attends a convention of his fellow serial killers. Rose's friend Gilbert, who looks strikingly like G. K. Chesterton, discovers the convention's true nature when he seemingly recognizes the Corinthian, and tells Rose that if she were ever in danger she should call a name he writes on a scrap of paper. A serial killer by the alias of Fun Land sees her, breaks into her room, with the intent of raping her. Grabbing the scrap of paper quickly, she calls out the name: Morpheus, and soon Dream arrives, puts Fun Land to sleep, and destroys the Corinthian with little difficulty, pocketing one of his three shrunken skulls for later. He then dispels the "cereal" convention.
Gilbert finds Jed in the back of the Corinthian's car, and has him sent to the hospital. Miranda, back in England, is sad to find that Unity has precious little time left, and is there to try and comfort her in her final moments.
Rose finds that she can merge the dreams of those who live in the same block. Dream informs Rose that she is in fact a dream vortex, and that he must kill her to restore order to the Dreaming, or the destruction of her world will result. Gilbert, actually Fiddler's Green (an area in the Dreaming) offers his life in Rose's place. Dream tells him that it isn't an option. However, before Dream can kill Rose, her grandmother Unity (now in a younger form, as if she'd never fallen victim to sleeping sickness), enters the Dreaming and tells Dream to kill her instead. We learn that Unity was the one who was meant to be the dream vortex, but she never became one because of the sleeping sickness, so it was passed on to her granddaughter instead. Rose gives Unity her "heart", the object that makes her the vortex. At that moment, Unity seems to naturally die in the waking world, thus destroying the vortex. Dream explains to Rose that there is much that he doesn't understand, but she doesn't have to worry about it.
After waking from the dream of almost dying and being saved by her grandmother's sacrifice, Rose Walker retreats into isolation and tries to make sense of what happened to her and her family. If the dream were true, she reasons, then humans would merely be pieces in a game played by powers which to think about for too long would drive one crazy. At the end of six months, she decides that she has brooded and pondered for long enough, concludes that her dream was just a dream and returns to normal life.
In the next scene it appears that Dream too has spent the last six months thinking, and he confronts Desire with his conclusions. It is revealed that Dream's androgynous brother/sister, Desire, devised the entire plot, raping Rose's grandmother in her sleep to set the wheels in motion. Desire's plan was to force Dream to kill a descendant of Desire and thus murder his own blood. This elaborate plot foreshadows many future troubles for Dream, and reveals Desire's vendetta with his/her older brother. Desire's plan to send The kindly Ones after its brother was made in Three Septembers and a January (included in Fables and Reflections), though the origin of their mutual hatred seems to be far more ancient than that (possibly even more ancient than the tragedy involving Nada).
Dream warns Desire that s/he has overstepped his/her bounds, that the Endless exist for the mortals and not vice versa, that, if anything, mortals manipulate the Endless, like dolls. However, Desire shows no signs of understanding Dream, and, fickle as s/he is, s/he promptly forgets the idea completely and convinces him/herself that s/he is the master of his/her own destiny.