Here's the deal: set up a small stage with all sequences of a traditional fairy tale like the Three Bears (three dollhouse chairs, three dollhouse beds, and a dollhouse table with three bowls.) Be creative. I think it is so healthy to show children how to use things like blocks and boxes in setting up a little puppet show.
I always do the first two puppet shows to demonstrate how to do it and to teach the children how to be a good audience. Then I start calling the children up to put on a "puppet show" for us. It will bring you to tears! They do such an amazing job!
IMPORTANT: Remember I tell a main story in my class for two weeks. The children hear me tell the story of the Three Bears orally, in puppet shows --- I read every version of the book I could find including extended and altered stories.
Educational Benefit: The student demonstrates an understanding of story structure - the beginning, the middle and the end; the sequence of events and dialogue; and sometimes, the capacity to extend and expand upon the story.
Here is a retelling from one of my students: