The doll who is telling the story has been taken out of her box in a doll store (possibly in Florida, since the family that buys her is on vacation there) and put in the window to be admired by “tourists”–a word that puzzles her and frightens the other dolls....
From pp. 11-15:

      But none of the other dolls was any wiser than I.  Not so wise, for the doll next me, a silly, black-haired thing in yellow, was frightened and cried and started a baby doll crying too. It was pretty dreadful for a while, and what I would have done to quiet the foolish things I can't guess, if I'd had to do it all alone.
      But there were two funny, plucky little Jap dollies there too, and they laughed at the baby doll and the black-haired one, while I comforted them and so we got them quiet at last.
    "There's no use getting frightened till you're sure you're going to be hurt. Then don't cry. Just think of a way out,”  I told them. And the boy Jap stood up in his funny little red dressing-gown sort of suit and made me a stiff bow.
    "Those words are bravest I have heard from any doll in this so honorable country," he said. "Honorable Miss, you are wise as you are beautiful." Then he made me another bow, and the black-haired doll got so angry she forgot to be frightened and we had no more trouble with her. She didn't even join in when we talked together. And we did have such funny, interesting talks, that queer, dear little Japanese boy and I!
...
    And then one day we all felt  silly enough. Our pretty clerk carne in in a great hurry and said, "The season has really begun at last. Lots of tourists came into town last night, and there are children among them. I'm going to fix my doll babies extra pretty to-day." And she did--taking an especially long time with me, till my hair--real curly hair you know, shone, and my clothes were as neat and pretty as could be.
     "There now, you're lovely," she said, "and I hope you get a good little mother very soon." She was a very understanding young woman. I almost expected her to know I was smiling "Thank you" at her. But the best of grown-ups are stupid about doll ways, after all.
    Then I just danced with curiosity, and the poor Japs, flat on their little backs, asked to be set up so they could see, and the baby doll stared and the black-haired doll began getting frightened all over again, for the pretty clerk said, "There, see-there's a party of tourists now-and they've got a child with them-they're coming right this way !"
    Will you believe it-but of course you know--those dreadful tourists were just nothing but people! How silly we felt, to be sure.
    "Tourists-people who tour or travel, of course," cried the Jap boy. "Why I no think of that, and I who so hard study honorable English? I feel so big foolish." And he rolled over and tried to hide his face.
     "Don't worry," I said, "we none of us knew. Not even the real American doll, black Topsy.
Roll over and look. They're here."
     They were. There were four of them, a big old gentleman with white hair and a white, pointed beard and a big, big voice; a little, sweet, white-haired old lady with lovely blue eyes, a young lady who was pale and quiet and a little girl, like the old lady, in lots of ways, only of course her hair wasn't white but brown, and was bobbed and tied with ribbon bows.
     I liked that little girl the minute I saw her, and she liked me. "Well now, Peggy girl, which of these fine dollies is to be yours?" said the old gentleman in his big, kind voice. "Or do you want a doll? Would you rather have a book, or blocks, or a tea set? You know it's to be only one thing, because we're traveling."
     "l know," said Peggy, "but, Grandpa, of course it must be a doll! Not just because I lost
Dorothy Isabelle out of the car window, but because a doll is the most comforting. I want this dolly."
    She reached out and took me right into her arms and I cuddled there as happy as could be. She suited me exactly, little Peggy did.
     Only I did wish there could be another doll along as company for me. I stared as hard as I could at the nice little Jap boy, because I hoped she'd ask for him too. So did he. He smiled his best. He almost forgot doll manners and tried to make a bow right before them all. Peggy understood and reached for him.
     "I'd like this one too, Grandpa," she said. "He isn't very big." For a moment the Jap boy and I were quite happy.
     But Grandpa shook his head.
    "Sorry, my dear, but little or big, he's one thing more to look after. One doll's enough while we're traveling. Wait till we get home and you can have a dozen. Take your lady dolly and be happy. She must be a very fine lady indeed to judge by the price I've paid for her."
    The pretty little clerk laughed. "She's the best we have, sir," she said, and then she turned to Peggy. "Make her a good mother," she said. “I’m very fond of that dolly. What do you think you'll name her?"
     Peggy looked up. "What's your name, please?" she said. The pretty clerk grew prettier as her cheeks grew pink.
     "Rosalie," she said.
     "Well, then my doll shall be Rosalie, for you, because you're so pretty, and because you loved her and because I always want to remember where and how I got her. And it'll be Lady Rosalie because she is such a fine lady."
     “My, thank you--thank you ever and ever so much," said the pretty clerk and she went to the door with us to say goodby.
     I tried to be polite and feel sorry at going beeause she had been very good to me, and kept me nice and trim and neat.
     But I was eager to go with Peggy for one thing, and for another I did feel so badly at leaving my little Japanese friend.
     He minded too. Right in the daylight, with grown-up humans all around him so that he might have been caught at any minute, he sat up and waved me a good-bye. And the last thing  I saw over Peggy's shoulder as we went away was the pretty clerk putting him back where he belonged and looking very much surprised at the place in which she'd found him.
     We never saw each other any more. Peggy took me by the store again, and we went in and saw the pretty clerk, and talked to her. The black-haired doll in yellow was up on my box, but the two little Japs were gone, and I didn't get near enough to ask any questions about them. Perhaps they were sold tourists too, and are traveling about the world this very minute. I hope so. It's such an exciting, interesting sort of life.