The scary castle where Fearnot spends the night appears to be the same location where the Storyteller tells his stories. It features the same fireplace with the two lion statues flanking the steps before it.
The story is loosely based on the early German folk tale "The Story of a Boy Who Went Forth to Learn Fear", collected by the Brothers Grimm.
The Rule of Three - Fearnot comes from a family of three (father, brother, and Fearnot) and is tricked by three bullies early in the story. It takes three encounters before he finally learns how to shudder (encountering the swamp creature, the half-demon in the castle, and the thought of losing his sweetheart).