Hagrid leads Harry into local wizard watering hole The Leaky Cauldron.
An uneasy silence descends briefly on the packed pub when Hagrid announces that his companion is the Harry Potter.
After a small brush with some adoring fans, Harry and Hagrid pop out to the back where they enter Diagon Alley.
Hagrid and Harry arrive at a bank called Gringotts to withdraw some of Harry's inheritance. Hagrid is also here to withdraw something mildy suspicious, as any "secret Hogwarts business" would be.
Harry enters Ollivander's Wand Shop, where—through a series of trial and error—he discovers the wand for him. The wand shares a core with the wand that gave Harry his scar—Voldemort's wand.
Hagrid and Harry return to The Leaky Cauldron for a drink. Hagrid explains what happened to him as a baby, the rise of Voldemort, and the scar that graces Harry's forehead.
Basically, the most evil wizard in the world—that's Voldemort, folks—killed baby Harry's parents. But for some reason he couldn't off young Potter: he could just grace his head with a sick lightning bolt-shaped scar. After that, Voldemort disappeared, and Harry Potter is now a wizarding world celeb.