My time period really begins with E. Nesbit, one the best children’s authors of the Edwardian era. Though she was not solely responsible, it is fair to say that she was the single most important figure in developing the 20th century children’s novel. Five Children and It was her second novel-length story (after The Treasure Seekers), and her first about magic.
Cyril, Anthea, Robert, and Jane (the fifth child is a baby) are spending the summer holidays in the country, where they discover the Psammead, or sand-fairy, in a nearby gravel pit. It promises them one wish a day, and so each chapter (or pair of chapters) is a magical adventure.
For this story Nesbit borrowed from Victorian literature like The Cuckoo Clock (1877), in which a magical cuckoo scolds the main character into greater moral rectitude while giving her magical adventures. But Nesbit upended the tradition by making the “fairy” a hairy, bug-eyed beast who is vain and bad-tempered and wants to be left alone to burrow in the sand. The wishes it grants give the children experiences that are neither beautiful nor morally instructive, but instead backfire in vaudevillian ways. (It is the first in a succession of Nesbit’s magical characters who are cranky, bossy, and vain, bearing more resemblance to various creatures in Alice in Wonderland than to Victorian fairies.)
Unfortunately, the individual adventures just aren’t that interesting. Most involve the children immediately regretting their wish. The children wish to be beautiful, and aren’t recognized by the servants; they wish for golden guineas, but are unable to spend them because they are not modern currency; they make an off-the-cuff remark that they wish other people wanted their baby brother, and suddenly they are dealing with kidnappers; Robert wishes he were bigger than the baker’s boy, and you can guess how that turns out; and so on.
It took a few more books for Nesbit to hit her stride in terms of plotting. The Story of the Amulet, The Enchanted Castle, The Magic City, and The House of Arden are her best works. And many people have a soft spot for The Railway Children as well.