Titaani manages to convince the moths to follow her, in hope for new and better light sources to dance around. (They aren't so much blinding, but rather lightly obscuring wherever they hover.)

Matilda barges into the Sewing Room, cutlery at the ready.

“Dunderhead!” cries a scratchy voice as she enters a cluttered chamber. “Those tatty sleeves wouldn’t serve as socks for a chicken. Start again!”

A plump halfling boy and a young, fluffy bugbear sit at work benches, watched over by a living, child-sized doll with buttons for eyes. An animated carpet prances around the children, who pay it no attention. The sewing room contains rolls of fabric, bobbins of thread, knitting needles, and pincushions.

The doll turns toward Matilda and pauses to look at the intruder and the curious crowd behind her.

"Excuse me. Why are you trespassing here?

Titaani, who is lagging behind, will duck behind the cover of the moths as soon as she hears the doll speak. She quickly uses mask of many faces to make herself look like Skabatha.

Stealth: 4

"They aren't trespassing," She says in her hag like form, stepping out of the moths dramatically. "They are my honoured guests."

Deception: 10

I'm going to use a luck point on that stealth roll - 21

"Oh! My apologies, madam!" The doll seems to accept Titaani's disguise. But looking at Matilda's drawn cutlery, it seems confused and alarmed as well. "What's going on?"

The two children – a male halfling and a female bugbear (both about 10 or 11 years old in human equivalence) gawk, but continue to work. 
The prancing carpet continues to prance.
The doll looks extremely old. A key dangles from a hoop attached to its waist.

Ben:

Bowing to Granny Titaani, Ben says, “We have little time to spare, Your Eminance, if we are to move the workers as you plan.”

(Help on her next Persuasion/Deception check).

"My guest is right, it is imperative we hurry," Titaani continues to the doll. "I don't have time to answer your questions, but if you must know, these children need to be moved. I am taking them to another, grander workshop that I have developed in a different area of my realm."

Titaani pauses to give Matilda a look that says 'put the weapons down or she won't buy it'. 

"We will need both of those children to come with us, immediately."

Deception: 22

Matilda immediately puts the weapons away, " Apologies, Most Glorious One. I overstepped in my eagerness to serve you."

Horatio does his best to hide his astonishment at the suddenness and complexity of the deception, keeping quiet and merely nodding. He decides to put on a 'tough guy' persona, and squares his shoulders, standing up taller as he does. He says nothing. 

The ploy works. Titaani makes a convincingly deceptive Granny. 

"Let's go! Let's go!" The tiny animated doll claps her hands loudly and prods the two children. They frown and obey, stopping their work and lining up to follow "Granny", a touch of fear in their eyes.

"Where are we to go?" it asks. "Of course, I shall accompany them?"

'"No need," Titaani responds. "I'd rather these individuals do the job, they're professionals."

Persuasion: 13

"Excellent," responds the button-eyed doll, shooing the children out the door and into the party's supervision. "Frankly, overseeing fabric production is..." it chooses its words carefully, "perhaps a little below my station. Nobody knows more about fashion than I do, and you know I've done so much for you. I am ready for my next appointment.” It seems to ignore everyone except Titaani-Granny.

"Mmm hmm," Titaani hums absently in an uninterested tone, distracted. She seems more concerned about the kids, as she turns to Will and Elkhorn. "You two. You will take these children to the place - you know the one." 

She desperately hopes inwardly that Will knows that she is talking about his home. 

Ben:

"Shall I fetch the ones from the dormitory as well, Your Eminence?" asks Ben obsequiously as they leave.

"Huh?" Titaani attempts to shift her attention away from the children leaving with Will and Elkhorn. "Oh yes, that's a great idea." 

Matilda moves to assist Ben.

Will and Elkhorn take the hint and lead the children back downstairs. Will does his best to hide his face from the doll. (Stealth: 3.)  Will points up toward the top of the stairs to indicate where the dormitory is. 

Ben and Matilda head upstairs. The doll and its dancing carpet remain in the sewing room.

"I don't understand," pipes up Sowpig, following the party up the stairs. "Is this gnome trying to masquerade as Granny? What is your intention?"

At the top of the stairs is a landing, and a closed double door. 

Ben:

Concerned that their new tagalong might start causing trouble for them, Ben looks back at Sowpig, saying quietly, "You are familiar with the rules of Hospitality, Ownership, and Reciprocity, I assume?  We are engaged in righting the balance of the second rule--returning possession of that which is owned to the proper owner.  Tell me, have you had any memories return to you that you thought were lost?  We recently returned stolen memories to their owners, though the nature of the return of the memories did not allow us to determine to whom they returned."

Persuasion if needed:  23

Moving up to the door, Ben opens it quietly and looks to see who might be inside, but not before he tries to gage Sowpig's reaction--is this perhaps a promising line of discussion with her?

Insight:  20

Matilda is extremely ready to cut Sowpig into small chunks.......the dead? girl is creeping her the hell out.  As soon as the door is opened she slips inside.

"Fortunately," replies Sowpig, "the rules of the living have little jurisdiction over the dead. Death is freeing – you should try it sometime. But I accept your logic, even as I don't pretend to understand these things..." She continues to follow the party, as do the moths. Ben can sense that she cares little for rules and politics and the concerns of the living.

Opening the door reveals a dormitory nestled in the tree boughs which has round windows overlooking a wooden balcony. Lining the walls are ten child-sized bunks outfitted with patchwork quilts and straw-stuffed pillows.

A young male dwarf lies in one of the bunks, coughing and drenched in sweat, while an older lad mops his brow with water from a bucket. Another door exit the room to the balcony.

Matilda moves towards the ill boy, " Ben? Can you help him?"