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Faintly Macabre begins the story of Rhyme and Reason by describing the horrible place the Lands Beyond were when they were first created. One day, a young prince from across the sea appeared and established a city that would become the Kingdom of Wisdom. Eventually he had two sons who went out in the wilderness to start their own cities, one founding Dictionopolis and the other establishing Digitopolis.
The king also found a basket with twin baby girls in his gardens one day. The king was delighted with the girls, whom he named Rhyme and Reason, and he raised them as his own children. When the king died, he left instructions that the Kingdom of Wisdom was to be divided equally between his two sons, who would also have the responsibility of caring for Rhyme and Reason.
Over the years, Azaz and the Mathemagician came to rely upon the princesses' wise judgment as the brothers grew more and more competitive and distrustful. Things reached a boiling point when they began arguing about whether numbers or letters were more important. The two rulers brought their quarrel to the princesses who, after careful consideration, declared that numbers and words were equally important.
At last, Azaz and the Mathemagician were able to agree upon something: they were infuriated by princesses' answer. In an act of rage, they banished Rhyme and Reason from the Kingdom and imprisoned them in the Castle in the Air. When the story is done, the Which explains that Officer Shrift "loves putting people in prison, but does not care about keeping them there" and shows Milo and Tock the way out. On the outside, the king's five advisors find them and immediately lead them off to the Royal Banquet.
Inside the banquet hall, Milo and Tock find a sizeable party waiting for them. The Humbug explains that they have been waiting for the guests of honor to select the meal. Milo proposes that they have a "light meal," and immediately a set of waiters hurries into the room carrying serving platters. When they remove the lids, rays of light shoot all over the banquet hall. The Humbug suggests that Milo select a dish that the guests might find "a little more filling." Milo, who has not picked up on the menu game yet, orders a square meal, prompting the waiters to bring plates filled with a variety of squares. For dessert, the waiters bring out platters of half-baked ideas, which the Humbug explains are very sweet but can cause indigestion. Milo munches on his "THE EARTH IS FLAT" while the king devours "NIGHT AIR IS BAD AIR."
As soon as King Azaz's nonsensical Royal Banquet is over, the guests rush from the hall, leaving only Azaz, Milo, Tock and the Humbug, who explains that they have all gone to dinner. The king declares that he will command that his guests eat their dinners before the banquet. That would be just as bad, Milo argues.
Milo gently suggests that the return of Rhyme and Reason might help sort things out. The king agrees but thinks that it is impossible, since someone would have to go all the way to Digitopolis to convince the Mathemagician then get past the wicked demons in the Mountains of Ignorance and scale the two thousand step staircase up to the Castle in the Air.
The king charges Milo with this seemingly impossible mission, ominously telling him that there is "one more serious problem" with the quest that Milo will only learn once it is over. Azaz hands the young boy a small box that contains all the words he knows and tells him that he may find it handy on his journey. Recognizing that Milo will need a guide, the king orders the Humbug to go along on as well. The Humbug, who has been trying with all his might to agree with everybody all at once, suddenly finds himself in a very disagreeable position but is calmed by the king's flattery. As a crowd gathers to cheer them on their way, Milo and his two companions embark on their great adventure.
In this section, Juster fully develops the Rhyme and Reason theme. The story of the rise of the Kingdom of Wisdom and the division between Azaz and the Mathemagician not only explains the literal disappearance of the princesses but also relates to the secondary theme of education. Rhyme and Reason are a part of neither the world of words or numbers. Instead they are common sense—something that is essential to wisdom but is not taught in schools. While Azaz and the Mathemagician had nothing to do with discovering or raising Rhyme and Reason, they do have the power to repress them. Their argument about numbers and letters (Juster may be referring here to the common disagreements among scholars and students) is pure nonsense, a fact that only the princesses, in their wisdom, can see.
Thanks to Faintly Macabre's story, Milo also understands the need for Rhyme and Reason, and, as a result, Azaz realizes that Milo is the perfect person to help secure their return. Since Milo conquered his boredom and laziness in the first section of the book, it seems his next quest will be to discover true wisdom, which is symbolized by the two princesses. His trip to Digitopolis and trek through the Mountains of Ignorance represent not only a physical journey but an educational one as well. In order to find wisdom, Juster seems to be suggesting that Milo will need to learn some lessons in the world of the Lands Beyond.
It is also important to notice the two companions who are assigned to help Milo. Tock and the Humbug are, in many ways, opposites. Tock is dutiful and selfless; his only concern is making sure that people use their time wisely, particularly Milo. The Humbug, on the other hand, cares mostly about himself. He constantly wastes time by blathering on about himself or trying to suck up to important people like King Azaz. These efforts at flattery are not only pointless but also counterproductive for the Humbug. His brown-nosing is directly responsible for his unwanted appointment as Milo's guide. If the Humbug had simply kept his big mouth shut, he would not have ended up escorting Milo on what he considers to be a fool's errand.
In this section, Juster also forwards a number of recurring motifs. As we have already seen, the Lands Beyond are filled with nonsensical people and deeds. Juster continues this motif in the Royal Banquet scene, adding to it a the new motif of punning. A pun is a play on words, a way of using the double-meanings of words to make jokes. Milo's disastrous efforts at ordering a meal demonstrate this motif: first he orders a "light" meal, by which he means small and healthy. The waiters, however, take the term "light" to refer to the beams that come from the sun or light bulbs. The same happens when Milo orders a "square" meal and discovers, after making his speech, that he must "eat his words." By playing upon the different meanings of these words and phrases, Juster creates a series of amusing puns.