Steven Millhauser, whose new collection, “Disruptions” (Knopf), is out just in time for his eightieth birthday, is the great eccentric of American fiction: a sleight-of-hand artist who from time to time seems to vanish into his own work. His first novel, “Edwin Mullhouse: The Life and Death of an American Writer 1943-1954, by Jeffrey Cartwright”—ostensibly a biography of an eleven-year-old novelist by his fifth-grade classmate—was a minor sensation when it first appeared, in 1972, and it became a cult classic. There has never been anything like it, both a parody of literary biography and a mesmerizing evocation of a small-town nineteen-fifties childhood.

Millhauser had another brush with fame in 1997, when his fourth novel, “Martin Dressler: The Tale of an American Dreamer,” won the Pulitzer Prize. But his second and third novels—one a portrait of a teen-age romantic and the other a fantasy set in the kingdom of Morpheus, the god of dreams—are not as memorable, and he is best known for his short stories and novellas, like the ones gathered in the new book, in which compression somehow allows his talent its fullest expression. (Millhauser has said that he likes the “fraudulent modesty” of the story, the way that, pretending not to strive for much, it actually aspires to embody the whole world.)

Occasionally, his stories turn up in large-circulation publications such as this one, but mostly they appear in literary magazines and specialized quarterlies, and they’re almost impossible to categorize. Millhauser reminds you of Borges sometimes, of Calvino and Angela Carter at other times, even of Nabokov once in a while. What sets him apart from other writers these days is that he’s a fabulist of a particular sort: his stories take place, for the most part, neither in the real world nor in one that’s wholly fantastical but someplace in between. Millhauser has a Nicholson Baker-like gift for meticulous, closeup description of the ordinary, but his world is also one that may be inhabited by ghosts, a realm where paintings and postcards come to life, where people can vanish or fly on carpets, and where it’s possible for someone to cohabitate with a frog.

For a reader coming to Millhauser for the first time, “Disruptions” may not be the ideal place to start. (That would be “We Others,” his 2011 collection of new and selected stories.) From his latest book, you wouldn’t learn just how much Millhauser loves illusion and all the gimmickry of illusion: puppets, peepshows, waxworks, automatons, flip books, magic lanterns, and, perhaps most of all, animated cartoons. One of his best stories, “Cat ’n’ Mouse,” is itself a kind of cartoon, cheerfully deploying the stock imagery of those old “Tom and Jerry” episodes—shiny round bombs with burning fuses and the like—in what’s both a sendup and a fond homage. You don’t so much read as watch inside your head when the cat, for example, after losing the top of his skull to a guillotine, crams it back on like a hat. Then he discovers that he’s holding a package with a stick of dynamite inside. It explodes, naturally, and, when the smoke clears away, the cat’s face has turned black and in each of his eyes there’s a ship, which slowly cracks in half and sinks.

Millhauser is also fascinated by miniaturization—models, replicas, doll houses, the smaller the better—and by its opposite, gigantism. In “Martin Dressler,” the title character, a nineteenth-century cigar-maker turned entrepreneur and hotelier, gets carried away and builds a hotel, the Grand Cosmo, so vast that, not unlike a Millhauser story, it becomes a world unto itself, with a haunted grotto, a Moorish bazaar, and a temple of poetry in which young women, clad in Grecian tunics, recite Wordsworth and Longfellow twenty-four hours a day. Another one of Millhauser’s stories imagines a department store so sprawling that customers get lost in it, amid brooks and streams, and areas made to look like a Victorian parlor or a foggy London street. In addition to snowblowers and mulching tractors, you can buy waterfalls, Viking ruins, a full-sized Venetian palazzo, a Scottish castle, or miles and miles of steaming Amazon jungle.

In the new collection, Millhauser has it both ways. One of the longer stories takes place in a Connecticut town where the inhabitants of a certain neighborhood are just two inches tall. Some of them have jobs in—what else?—nanotechnology, and others work in the homes of their (relatively giant-size) fellow-townspeople, removing lint from clothes, polishing eyeglasses, scouring attics and cellars for ants and mouse droppings. The little people and their counterparts mainly get along, and sometimes even have dinner together. Millhauser, with his eye for detail, is very precise about the logistics of these encounters—the miniature tables and chairs set out on the regular-height tabletop, the motorized platforms that raise the smaller people up from the floor. He’s quite explicit, too, about what happens when a small person and a large one fall in love and attempt to have sex. The story is funny and affecting (it’s reminiscent at times of “Stuart Little”), but disturbing as well. It’s about difference, of course—not just difference of scale but difference of perception. There are people in both groups who believe that this mingling has gone too far, because it makes people of both sizes feel inadequate, awkward, ashamed. Among the larger people, there’s a segregationist faction called Think Big. At the high school, though, there is a Shortness Club, whose members wish that they could be more delicate and petite. One boy, a sophomore, even tries to cut off his feet with a hacksaw.

The new collection includes a couple of excellent stories about dreamy, moony, self-conscious adolescents, another of Millhauser’s preoccupations. He’s written about them so often you can’t help guessing he must have been one himself. At the core of “Disruptions,” though, is a group of stories in a mode that Millhauser keeps returning to in book after book: a disorienting version of the small-town tale. These stories are set in the archetypal old Connecticut town where so much of his fiction is situated, a place with a green, a steepled church, a historical society, a museum. At one end of town is Long Island Sound, with a beach that teen-agers go to at night. At the other end, you can hear the traffic on the throughway. In between are leafy neighborhoods of houses with wide lawns and big porches set back from the street. The residents are diligent about mowing and watering, cleaning out the garage, touching up the paint on their shutters.

As if to underscore the generic quality of the setting, Millhauser’s small-town stories are mostly written in the first-person plural, using “we” instead of “I,” because the narrator is reporting on something unsettling that is happening to the whole town. Invariably, the residents are seized by a kind of collective restlessness, a yearning for something else, something different, only with nobody quite knowing what that should be. In an earlier work, for example, the town is overcome by a mania for mermaids; in a darker version, the townspeople fall in love with death and begin killing themselves. In the new book, the first such disruption takes place in a story called “Theater of Shadows,” in which the residents are captivated by a puppet master who puts on little skits and dramas from behind a curtain, and then become obsessed with the idea of darkness itself. They take to painting their houses black, filling their sandboxes with black sand. Then there is a run on something called Shadow Glass, which drains color from objects, and on another product, Shadow Shellac, which, when painted on houses and garages, gives them the look of a “grainy movie filmed in black and white.” Babies begin to wear black diapers, grownups blow their noses in black tissues. In the end, the whole town seems in danger of fading away. “Some say that our passion for shadows has gone too far,” the narrator says, going on to defend it in words that echo the old hymn: “For then our eyes were unopened, but now we see.”

In “Green,” a fad for grassless back yards sweeps the town. People rip up their lawns and replace them with bricks and cobblestones. Next, the trees start to go, and by Labor Day the town is stripped of green. Then, in the spring, the pattern is reversed. First one family and then another starts planting bushes and reseeding the yards, and then, of course, this being a Millhauser town, everyone goes too far. Houses start disappearing behind hedges, the Department of Public Works begins ripping up the streets and planting trees there. People cover their porches with sod, grow vines in the living room. “I could feel it myself,” the narrator says, “this restlessness, this desire to push beyond carefully defined limits toward unknown lands.” He adds, “Some say that if we don’t change direction, our town is destined to disappear entirely. . . . Others feel that just as we once turned from green to stone and back again to green, so another change is imminent, though what that change might be, no one can say.”

There’s also a pair of stories about elevation. In one, “The Summer of Ladders,” neighbors begin competing to see who can climb higher. The hardware store sells extension ladders that come in three or four sections and stretch to seventy or eighty feet. It is as if, the narrator says, no height could ever be enough. Inevitably, people begin to fall. One man breaks his neck; a sixteen-year-old boy ascends his father’s ladder, bends back to look at the moon, and plummets to his death. Still, people keep climbing, until one man goes up into the clouds and is never seen again.

In the other story, “The Column Dwellers of Our Town,” the town is home to forty-one columns, some made of stone and mortar and other, newer ones of reinforced concrete, ranging in height from sixty to a hundred and forty feet. When the story begins, thirty-seven of them are occupied. People go up there to live—for reasons they can’t really explain—and almost never come down. What they do there is a matter of town-wide debate and speculation. Not everyone approves of the column-top dwellers, and yet there is a civic association devoted to the maintenance of the columns and the provisioning of those who live on them. Most of the townspeople can’t imagine life without them.

All these stories are about transcendence—about a wish to get away from the worlds we inhabit and the limitations they impose on us. Sometimes this urge has an explicitly religious dimension. A minister in “Ladders,” for example, denounces the ladders as dangerous metaphors, “materialistic perversions of spiritual striving.” In the story about the columns, they are said to have originated with a fiery seventeenth-century preacher, but the whole notion obviously owes something to the stylites, those early Christian ascetics who lived on top of pillars in the desert. With their pristine New England setting, their sense of collective restiveness—of a community caught up in a spiritual yearning that nobody, including the narrator, can quite put a finger on—these small-town stories verge on allegory, that no longer fashionable form, in a way that may remind the reader of America’s first great fabulist and allegorist, Nathaniel Hawthorne.

Millhauser was raised as a secular Jew and perhaps for that reason is less guilt- and sin-obsessed than Hawthorne, but the two writers nevertheless share some preoccupations. Hawthorne, for example, was also fascinated by clockwork and automatons (see his strange story “The Artist of the Beautiful”), and in one of his tales there is, just for the oddness of it, a sort of peepshow diorama. Millhauser’s story “Tales of Darkness and the Unknown, Vol. XIV: The White Glove,” though the title presents it as something appearing in a cheesy-sounding periodical, is actually a very clever modern-day retelling of Hawthorne’s “The Birth-Mark,” and his various macrocosms, those worlds within worlds, must owe at least something to Hawthorne’s Hall of Fantasy.

But Millhauser seems to be made even more uneasy about the imagination, or maybe about art itself, than Hawthorne was. On the one hand, mere reality always leaves his characters, like Millhauser himself, wanting something more. On the other hand, as in “Martin Dressler” and “An Adventure of Don Juan,” a novella about an eighteenth-century English landowner building an epic theme park on his estate, you get a sense of a dangerous imagination running amok. It’s as if Millhauser were warning us against the seductions of his own storytelling. He depicts his characters’ follies in sometimes extravagant detail—this is a writer who really, really likes making things up—and the reader is swept up in his pleasure. And yet in Millhauser’s work the artistic vocation is often a fatal one. His novella “The Little Kingdom of J. Franklin Payne” is about an early-twentieth-century newspaper cartoonist who throws himself into the world of animation but loses his grasp on reality and ruins his health and his marriage in the process. Edwin Mullhouse, the precocious eleven-year-old novelist of Millhauser’s first book, winds up killing himself.

Much as Millhauser relishes the magical, he also has a soft spot for the humdrum: the sound of a lawn sprinkler, the sight of a basketball left on a driveway. His genius is to be able to evoke both so urgently. It’s telling that, in most of the Connecticut stories, the townspeople, after their flings with shadows or ladders or whatever, eventually come back down to earth. One such story in “Disruptions,” told in the first-person singular rather than plural, is about what happens when the town is gripped by a kind of collective exhaustion, a weariness that spreads like an infection until everyone falls asleep for three whole days. When the narrator comes to, he listens to the sounds of his neighborhood awakening—a power mower, a pair of chainsaws, a bicycle tire crunching on gravel—and, reflecting back on his strange tiredness, he says, “I seemed on the verge of understanding something that would change my life forever, but it all felt vague and far away, as if I had imagined it long ago, on a summer afternoon in childhood, and with a new burst of attention I listened to the clatter of a skateboard, a nearby shout, a shut door.” ♦