Many of the fantasy short stories of Lord Dunsany, written in the early 20th century, evoke a certain odd flavor, an atmosphere of magic, somehow child-like in perspective, but at the same time sophisticated and droll. He had the unusual ability to combine humor with seriousness. I always get the feeling that the humor is rather in the spirit of saying, with a wink to the comprehending reader, "You and I know this is serious, and full of wonder....but we need to act as if we mean it in fun, lest we embarrass ourselves to those who do not believe in, or understand, the wonderful tales of old". Something like that anyway. As I think Ursala K LeGuin has somewhere pointed out, Dunsany (along with James Branch Cabell), was able to use humor without undercutting the sense of wonder.
Dunsany almost never used dialogue in his stories, choosing instead his own characteristic way of paraphrasing what a character said or thought. Many have said that he was long on style, but short on plot, and this is probably true. But it is irrelevant to what we might find special in his works. He was really more of a poet. The vantage point is often that of the small child who maybe thinks that the world is flat, that rainbows are other-worldly, and that amazingly different beings and creatures of faery dwell just over the next hill, or over the horizon. Many realists will probably find his stories silly, but, according to LeGuin, Dunsany has a widespread appeal to scientists. Oddly, Dunsany was apparently fascinated by technology--in contrast to, say, Tolkein and Lewis who seemed to evince "Luddite"-like distrust of it.
Today, most people you meet do not seem to have even heard of Dunsany, even though a web search will turn up sites written by a great many enthusiasts. H. P. Lovecraft was an adorer of Dunsany's work, calling it "crystalline singing prose", and himself went through an early phase where he imitated the style. Arthur C. Clark considered the last pages of The Charwoman's Shadow as the most beautiful and sadly nostalgic ever written. Philosopher Martin Gardner is also a Dunsany lover, and titled one of his books after a Dunsany phrase, "The Night is Large and Full of Wonder".
Those who want an epic fantasy, such as Lord of the Rings, will probably want to look elsewhere. As will those, I think, who want deep and subtle characterization, for it is largely absent in Dunsany's fantasy work. By the way, Dunsay also wrote plays of a more realistic nature, which were rather more well known in the mid 20th century. For example, I recall that the main character in Sinclair Lewis's novel Main Street, a culturally ambitious woman named Carol, living in the small town of Gopher, Minnesota, organizes a production of one of Dunsany's plays.
He wrote two fantasy novels, The King of Elfland's Daughter, and The Charwoman's Shadow. Both contain some beautiful passages, but tend to be a bit hard to get into.
My favorites are his short stories. I especially love "The Last Journey of the King", "The Ebb and Flow", "The Sword of Welleran", "Blagdross", "The Kith of the Elf-folk", and "The Three Sailor's Gambit". This last one is a quite amusing chess tale (Dunsany was a chess master, one of the highest ranked in Ireland at the time, I believe), but also contains many poetical passages.
"The Last Journey of the King" is a heart breaker, and concerns an aging king inquiring of his bevy of wise men what awaits him in the after-life. They each have their own versions to tell him, and each tale is of astonishing and soul wrenching beauty. There is always a thread of cynicism toward worldly things running through Dunsany's stories, and "The Kith of the Elf-folk" contains a heady dose of it while remaining gloriously poetical. The central character is a small marsh elf who has a go at being human with a "soul", but decides to go back to its Elvin existence in the end. His cynicism toward worldly pursuits comes out in "Blagdross", where he makes the poignant observation that sometimes, upon "seeing gold", people grow larger in their bodies while shrinking in their soul. I think will few dispute that, but none can put it so marvelously.