As with the other Treehouse of Horror episode, it contains three self-contained segments. In "Attack of the 50-Foot Eyesores", a freak storm brings Springfield's oversized advertisements and billboards to life and they begin attacking the town. The second segment, "Nightmare on Evergreen Terrace" is a parody of the "A Nightmare on Elm Street" film series, in which Groundskeeper Willie attacks schoolchildren in their sleep. In the third and final segment, "Homer3", Homer finds himself trapped in a three dimensional world.
Krusty as the Headless Horseman from The Legend of Sleepy Hollow, is holding his laughing head, and hurling it at the camera, which makes the show's title appear on screen in blood. We hear Krusty do his trademark groan. Later The family are hanged on nooses, staring blankly. Despite being dead from asphyxiation, Maggie manages to suck on her pacifier (possibly because she's not heavy enough to choke from the noose).
In a parody of the 1958 film, Attack of the 50 Foot Woman,Homer goes to Lard Lad Donuts to get a "Colossal Donut", where he denounces their advertising when he realizes that the "colossal donuts" aren't very colossal. So, in revenge, he steals the Lard Lad mascot's metal donut. In the midst of a freak storm, Lard Lad and other giant advertising figures come to life to terrorize Springfield. Homer eventually returns the donut, but Lard Lad and his friends simply keep right on destroying. Finally, Lisa goes to an ad agency, and an executive suggests not to look at the monsters. He tries to write a song, but suggests it would actually sound better coming out of Paul Anka, who performs the song "Just Don't Look" with Lisa. The citizens of Springfield do not look at the monsters, who lose their powers and become lifeless. Homer is still paying attention to Lard Lad and the metal donut. Bart and Lisa pull him away, causing Lard Lad to collapse and become lifeless.
In a parody of A Nightmare on Elm Street, Bart is outside playing Frisbee with Santa's Little Helper. Groundskeeper Willie appears and tries to kill Bart (using the styles of Freddy Krueger). Bart is slashed with a rake, and he wakes up from the nightmare, only to find marks on his body. Many other kids at Springfield Elementary School also say they were terrorized by Willie in their nightmares, and what he did actually affected them. Principal Skinner says there's nothing mysterious about Willie and that he simply disappeared, before telling them not to question the "bizarre cover-up". When the students take a test, Martin finishes early, falls asleep and is killed by Willie. Martin dies in class, with his face and body frozen in a look of absolute terror. When Bart and Lisa tell Marge about Martin's death, she says she doesn't see how it involves Willie, but Bart says they didn't mention Willie. Marge explains that when she, Homer and other parents attended a PTA meeting, Homer turned up the thermostat (even when there was a note saying "Do Not Touch"), and the extreme heat made Willie burn to death. Because the parents looked on and did nothing, he told the parents he would get his revenge by killing the children in their dreams (the one area where the parents cannot protect them). That same night, Bart, Lisa, and Maggie try to stay awake to avoid dreaming, but Bart later decides to go to sleep and dream of fighting Willie. Bart appears in his dream and attempts to get Willie, who can also transform into other things. Willie turns into a bagpipe spider and is about to kill Bart, when Lisa enters, trying to wake him up. But since she's in the dream, that means she has also fallen asleep (she claimed that she was just resting her eyes). They're about to lose the battle when Maggie appears and uses her pacifier to clog the bagpipe chimney, causing Willie to explode. The next day, everything is back to normal, but Lisa is still worried that Willie might still be out in the world somewhere waiting to kill them in ways they can't imagine. A bus then stops in front of them, allowing Willie to get off where he makes a few pathetic attempts to scare the children. When the bus leaves, Willie chases after it because he left his gun on his seat.
In a parody of The Twilight Zone episode "Little Girl Lost," Homer desperately tries to avoid Patty and Selma during a visit. He hides behind a bookcase and stumbles upon a gateway to the third dimension. Homer explores the peculiar area while searching for a method to escape it when a bouncing cone stabs him in the butt. When he accidentally throws the cone in the center of the ground, point first, it starts to collapse into a sinkhole, taking Homer closer to it with increasing force. Outside, Professor Frink explains to the others that Homer was in the third dimension. Chief Wiggum shoots the wall that Homer passed into when entering the 3-D universe, but the bullets just get sucked into the black hole after Homer narrowly dodges them. Bart then ties a rope around his waist, and goes into the dimension to save Homer. However, the distance between them is too far for Bart to reach Homer. Homer leaps for Bart, but falls short and into the sinkhole, Bart ends up back in the house thanks to his safety rope after the third dimension imploded on itself. Bart tells the truth about what happened, much to Marge's dismay. Hoping to provide solace, Reverend Lovejoy says to her that Homer will end up in a better place. Homer lands in a dumpster in the "real" world, where he is met by shocked "real" people. He then sees a shop named "Erotic Cakes," goes inside and he forgets all of his troubles.
The first version of the episode was very long, so it featured a very short opening sequence and did not include several trademarks established in previous Treehouse of Horror episodes. "Homer3", pitched by executive producer The Late Bill Oakley, features three dimensional computer animation provided by Pacific Data Images (PDI). In the final scene of the episode, Homer is sent to the real world in the first ever live-action scene in The Simpsons. It was filmed on Ventura Boulevard in Studio City and directed by former executive producer David Mirkin. "Attack of the 50 Foot Eyesores" includes a cameo appearance from Paul Anka, who sings the song "Just Don't Look".
The episode received very positive reviews. It was described as "Complex, very assured and very clever, [...] The computer graphics are outstanding, and the final scene – as Homer enters our dimension – is one of the highlights of the entire series." Colin Jacobson of DVD Movie Guide said, "'Attack of the 50-Ft. Eyesores' stands as the strongest of the three segments. It doesn’t blast off the screen but it seems imaginative and fun. The Nightmare on Elm Street parody has its moments and comes across as generally entertaining. However, it lacks the bite the best pieces offer. Unfortunately, 'Homer3' gives us the weakest of the bunch. It tosses out a few funny bits, but it mostly feels like an excuse to feature some 3-D animation."