The storyline plays right on classic Disney themes. In the beginning, we see Mickey control water, just like he was doing in The Sorcerer's Apprentice in the 1940's movie Fantasia. Must say, Mickey uses the water (and fireworks) to make some cool scenes for all us to look at.
Then we see more examples of imagination - clips from Disney movies shown on water, and live action scenes from Lion King and Pocahontas. Then we see some "beautiful" things from Mickey's imagination - namely the princesses and their princes on boats passing by.
Well, all this prettiness doesn't go unnoticed by the Disney villains! The Snow White Queen comes out and decides to stop Mickey and his imagination. She turns into the Old Hag and summons the other Disney villains to come and help stop Mickey, and turn his imagination into a nightmare! Jafar turns into a large serpant and tries to chase and corner Mickey. The Hades starts showing scary, awful images to Mickey. Mickey is getting quite concerned and worried by this point, but he remains strong.
Then Maleficent comes out, the most powerful of the villains, trying to finish off Mickey's imagination. She turned into a dragon and spews out fire everywhere, which surrounds poor Mickey. Mickey looks doomed, the villains are winning! But wait - Mickey suddenly becomes confident, but why?? As shown in the beginning, Mickey can control water! Water can put out fire! He uses his powers to make water appear everywhere, which promptly puts out all the fire from the dragon Maleficent. Maleficent and the other villains, realizing Mickey now has won, literally get sucked down the drain! Then Mickey and all his good Disney friends appear on the classic Steamboat Willie, and some more fireworks from Sorcerer Mickey finish up for the finale.
This is probably more plot then you were looking for, but I love Fantasmic! It is a story of good vs. evil, and good wins!