Sandy tells lies. Not just ordinary lies, either: lies that no one can believe, like a dragon ate her homework. So Puff the Magic Dragon shows up and takes her to the Land of Living Lies, where it turns out that he's actually a psychoanalyst and can cure her of lying in just one session!
It's one of those animated specials that showed up on TV in the late 1970s meant to tell Very Important Messages to children. To bolster its impact -- on the adults who made the decision to greenlight this, and presumably would force their children to watch this -- this uses Burgess Meredith to voice Puff, and Peter Yarrow wrote some new songs for it.
In the period when traditional animation was at its trough, this is ok. I'd prefer something with a little more entertainment value.