A Disfiguring Frame
"At the least, even if the reported dream was in other respects in itself a fairy-story, I would condemn the whole as gravely defective: like a good picture in a disfiguring frame."
In this passage, Tolkien is distinguishing the 'fairy-story' from the tale told via the mechanism of a dream; such a story doesn't allow for the possibility that the Secondary World is a real place, which is one of the primary tenets of Faërie. In order to accurately convey his criticism of this type of literature, Tolkien uses an effective analogy: this dream-literature could contain a wonderful story in a Secondary World (a good picture), but told in a manner that conceals the beauty of its true nature (the disfiguring frame).
Attics and Lumber-rooms
"Collections of fairy-stories are, in fact, by nature attics and lumber-rooms, only by temporary and local custom play-rooms."
In this simile, Tolkien is taking issue with traditional collections of "fairy-stories," most of which he contends are not true fairy-stories at all. He compares these collections to "attics and lumber-rooms," which are dusty places full of junk and useless material, but in which one can often find, scattered and concealed in corners and in old boxes, something rather interesting and valuable. Fairy-tale collections are similar: most of it is junk, but there are certain aspects and tales that are actually quite good.
Books Like Clothes
"Their books like their clothes should allow for growth, and their books at any rate should encourage it."
In this passage, Tolkien is taking issue with the popular conception that fairy-stories are for children, not adults, who have graduated beyond childish imagination to belong in the "real world." He argues that fairy-stories should be intended for people of all ages, as they are hugely beneficial for the intellectual health of all, and watering down stories to preach to little kids is a perversion of their natures. These stories should provoke people of all ages to thought, and this simile argues that children should read stories that lead to their intellectual and moral development, not simply treating them as foolish children.
Cage-Birds
"Creative fantasy, because it is mainly trying to do something else (make something new), may open your hoard and let all the locked things fly away like cage-birds."
Tolkien is a great advocate of fantasy as a vehicle for "recovery," or an intellectual palate-cleansing that makes the reader wonder anew at the strangeness and beauty of this natural primary world. This effect is encapsulated in this simile, which compares the things people have locked away and taken for granted to birds flying out of their cages when presented with creative fantasy.
A Big Glass-Roofed Railway Station
"These prophets often foretell (and many seem to yearn for) a world like one big glass-roofed railway-station."
In this passage, Tolkien is condemning the modern tendency towards industrialization at the expense of imagination and natural beauty. He mentions science fiction, the most escapist and speculative of all literary genres, of which the primary figures ("prophets") warn that the world is turning into what seems to be a giant railway station, full of bustling and ugly, impersonal technology, where nature and imagination have no place. This simile is a striking one, and it's certainly visually arresting.
