Welcome Home primarily focused on the neighbors, the show’s inhabitants, who were accompanied by a mixture of animated breaks, puppeteered shenanigans, and illustrated story book segments. The setting itself was a colorful and exaggeratedly designed town named "Home", with unique elements like a post office and a grocery store, as well as brightly colored and fantastical creatures that lived within it.

Episodes usually began with Wally, alongside Home, introducing the focus or theme for the day, before coming across other characters who would join him on his escapades until the end of the day, which would signify the end of the show. All of the characters had notable, recurring segments or activities that were sprinkled throughout the entirety of the show’s run, such as Eddie Dear creating arts and crafts, Sally Starlet performing plays, or Wally Darling painting a picture with the help of other members of the cast. The viewer was often regarded as an additional neighbor, with Wally speaking to them on a regular basis.