In order to understand this movie at all there needs to be some background given. The animals seen in the movie are called Tanuki. They are actually a form of dog, belonging to the species Canis. They don't really look like dogs, though, they look sort of like a cross between a raccoon and a badger.

In Japanese mythology there are various animals that can transform into other forms, and the tanuki are among those. The tanuki are often tricksters, fooling people with their powers of illusion and playing tricks on people.

In this movie the tanuki start out looking like normal animals, but, when people aren't looking, they can transform and move on two legs (and end up with clothes on, somehow.)

There are also details in the legend relating to the size of the male reproductive structures, but if you want to know more about that you can do a search on the net.

The movie opens being told by one of the tanuki. This group of tanuki has taken up residence in an abandoned farmhouse.

They have to flee a farmhouse they lived in, though, when it's destroyed by humans.

This forces the group to find other places to get food, and eventually a war between groups occurs.

A strange person appears from the forest, telling the tanuki that no matter which side wins the battle they will all lose since the forest is gone.

The movie then goes into how the land is being destroyed to provide human housing. They develop a five-year plan for dealing with the humans and decide to bring in some tanuki from other areas who are more knowledgeable about "the craft."

They set up a television in an abandoned shrine to learn about humans, but this leads to a lot of unauthorized tv watching for fun. They also decide they need to limit their population growth, so when spring comes the females fight off the males rather than giving in to their advances.

The tanuki also have the ability to transform into humans. They can't hold that form very long, though, and they need to drink energy boosters.

A group of ten tanuki undertake an effort to confront the humans and defeat them. They use their powers of illusion to cause trucks to have accidents, killing three humans and injuring two more. Afterwards some people start believing that the various local dieties have placed a curse on the construction project.

The tanuki take advantage of this and start to appear as ghosts, spirits, etc, to try and get construction projects cancelled or at least delayed. Although the media are enjoying the "supernatural" events, construction does not stop.

Although they manage to scare off some construction workers, more arrive, and there is talk about eliminating the wild tanuki in the area.

A tanuki from another area arrives one day to tell the others about illegal dumping that is destroying another forest area. Elder tanuki meet elsewhere but fail to decide on any particular course of action. Back at the original site, construction had taken away land and the remaining tanuki are suffering a shortage of food.

The elders that were expected finally arrive and plans for war are made.

The war is called Operation Poltergeist, where the takuni will take various goblin, demon and other spirit forms including a parade of foxes. They move through the town in a parade form with an incredible variety of appearances. The people watching, though, instead of being scared think it's a really neat parade.

Gradually, though, more and more people actually become scared as the forms the takuni take include walking electrical towers and concrete structures and other bizarre things.

One of the elders dies during the operation, though, and young people in general are not really scared over the strange things they saw. The entire thing is explained away as the promotion for a new theme park. Matters worsen when the theme park owner claims that he actually did stage the parade.

A strange person appears at the park's office and offers to help find the actual people responsible for what happened. The person actually, though, is a fox.

He meets with one of the takuni leaders and explains that the only way the few remaining foxes in the area survived was to appear as humans and live among them. He explains that they could go to work for Wonderland, the theme park, and make the money they need to survive.

The tanuki split among themselves, though. Some decide to follow a warlike approach, some tend to family, some set up a new religion to follow.

The situation gets much worse and a full-scale battle begins to take place between the hawkish group of tunuki and riot police and hunters. Some of the tanuki are killed.

In another area, a friendly TV crew appears at night to try and meet the tanuki. They tanuki appear and try to explain their situation to the reporters.

Another group board a "treasure ship" and sail to their deaths.

The remaining ones that could transform took the fox's advice and transformed into humans to live in their world. Some managed to succeed, others returned to their old way of life.