This is an older book about magic in a theater run by goblins, for once depicted not as the bad guys, but as a city's protectors.
Rownie is one of the orphan children collected from the streets of Zombay by the mechanical chicken-legged witch, Graba.
When his older brother goes missing, he can't stick around with her, waiting helplessly for him to come back. Rownie escapes, knowing Graba won't stop searching for him. To avoid her many eyes in Zombay's deepest, darkest corners, he ducks into a theater production put on by goblins.
Now, in Zombay, only goblins are allowed to put on masks and act on stage. There's a reason for this -- the masks contain the magic of all the players who've put them on before, and the roles they've been used in. But the residents of Zombay have, over time, lost this knowledge and they no longer know why human children aren't allowed to wear the masks.
In fact, it's a totally made-up restriction, by a power-hungry official who wants to be the only playwright in Zombay, even if it means chasing all the goblins out and letting the city be flooded. He's cut out Rownie's brother's heart, leaving him a unthinking, unfeeling husk ripe to play the part of whatever mask is put on his face.
Graba doesn't take well to someone challenging her control over her corner of the city, however. And the goblin players aren't powerless, either. Rownie figures out a way, with his brother's lifeless husk, to save the city.
I won't spoil the ending, it was surprising. A very imaginative offering for under the tree this holiday!