In the opening chapter of The Velveteen Rabbit, we are introduced to a young boy who eagerly anticipates the joys of Christmas. On this special day, he receives a beautiful Velveteen Rabbit as a gift. The rabbit, made from velveteen fabric and stuffed with sawdust, is soft and cuddly, capturing the boy's affection right away. As the boy plays with the Rabbit, he begins to form a strong bond with it, and the Rabbit starts to understand what it means to be loved.

Amidst the excitement of the boy's new toys, the Velveteen Rabbit feels a mixture of joy and uncertainty. It listens attentively to the conversations that unfold in the nursery, particularly the wise words of the Skin Horse, an older toy who has been around for a long time. The Skin Horse explains to the Rabbit that becoming 'real' is not about how one looks but rather about the love and affection that one receives from a child.

The Rabbit learns that when a child loves a toy for long enough, the toy becomes real to that child. The Skin Horse elaborates on this transformative process, sharing his own experiences and the wisdom he has gained over the years. He tells the Rabbit that being loved brings about a change that cannot be easily described; it is a magical experience that gives toys a sense of existence beyond mere playthings.

As the Rabbit listens, he feels a deep yearning to become real himself. The idea of being cherished and recognized as something more than just a stuffed toy ignites a desire within him. The chapter sets the stage for the central theme of the story, highlighting the transformative power of love and the intrinsic connection between a child and their beloved toys.

Through the Rabbit's perspective, readers begin to grasp the essence of love's role in defining reality for toys. This leads to the overarching message that true 'reality' is shaped by emotional bonds and the experiences shared between a child and their favorite toy, laying the groundwork for the adventures and challenges that lie ahead in the Rabbit's journey to become real.