After Denzel Crocker got his hands on Timmy's Fairy-versary muffin, he took a bite and wished that he could capture a fairy. Shortly after, Crocker captured Wanda and trapped her within a scepter. Crocker then drew magic from her and used it to transform the entire world into his domain and turns Dimmsdale into this city. After the transformation, Chet Ubetcha (now called Chet Ubowdown) tells everyone to "bow down" to Mr. Crocker and a number of citizens of Dimmsdale are shown doing so, including Vicky, Chester, A.J., Tootie, Mr. Turner, and Mrs. Turner. Later when Timmy and Cosmo battled against Crocker, the latter captured Cosmo. The battle then continued in many other dimensions eventually leading back to Timmy's house.
When Timmy got back to his house, Crocker threatened to turn his parents into ice statues and transport them to the sun. Timmy had no choice but to surrender. Crocker then proceeded in wrapping Timmy up in chains. Timmy then purposely revealed his Godparents' existence to his parents so that Crocker could not use their magic to hurt people (as this is a violation in the Da Rules). Da Rules then appears in front of Crocker and takes Cosmo and Wanda away. With that done, Timmy's parents then beat up Crocker with the Magic Muffin falling out from where Crocker stored it to right where Timmy is. Timmy then ate the last of the Muffin to make a rule-free wish which was to get his Godparents back. He then wished Cosmo and Wanda to undo the entire mess Crocker made and wipe everyone's memory of the events that had occurred in the movie.
All of the suburban homes of Dimmsdale have been replaced by decrepit shacks made out of sheet metal. The ground is desolate and free of vegetation. By far the largest structure is a giant palace modeled after Crocker which was once Dimmsdale Elementary School.