Most good stories start with a fundamental list of ingredients: the initial situation, conflict, complication, climax, suspense, denouement, and conclusion. Great writers sometimes shake up the recipe and add some spice.
Exposition (Initial Situation)
A Sad Sack Comes to Town
The narrator's preface sets up the story with all of Harry's weirdness and isolation. We know that something strange is going to happen with this guy who thinks he's a wolf and doesn't seem to have any social skills.
Rising Action (Conflict, Complication)
Not Just Any Book
Harry gets a book from a mysterious man in the middle of the night, and it turns out to be about him and his personal philosophy! This creepy development lets Harry, and the readers, know that someone is watching him and has plans to change his mind about being the Steppenwolf.
He also meets a mysterious woman (yeah, lots of mysterious people in this book) who teaches him how to dance and helps him to get ready for a big party, a costume ball. Harry is super excited about the bash.
Climax (Crisis, Turning Point)
Into the Magic Theater
At the costume ball, Harry shows off his new dancing and fun-having skills, and finally figures out what the deal is with the disappearing magic theater. When he kills Hermine there is no turning back (he thinks) and he has fulfilled her last command.
Falling Action
Lighten Up!
Harry hallucinates about Mozart, who turns out to be his friend Pablo. Mozart shows Harry what a mess he's made of the Magic Theater. Instead of having fun and trying out all the infinite possibilities available to him, he went and got all suicidal. Harry didn't get the idea at all, and really should have had fun instead of constantly trying to kill himself.
The point of the Magic Theater was for Harry to learn to see things from the perspective of the immortals, who can laugh at life's little problems. Unfortunately, Harry still has a ways to go.
Resolution (Denouement)
Try, Try Again
Harry realizes that he will have more chances in the Magic Theater and thinks that he'll learn how to laugh (which is the point of all his trials, and of life, man) one of these days.