'It' is a Psammead (voiced by Eddie Izzard), an ancient, ugly and irritable sand fairy the children find one day on a secret beach at their uncle's mansion. It grants them one wish per day, lasting until sunset. But they soon learn it is very hard to think of really sensible wishes, and each one gets them into unexpected difficulties. Magic, the children find, can be as awkward as it is enticing.
I started watching it a few years ago but drunk too much sherry and fell asleep, I can't really remember anything after some kids emptying a bath down the stairs or something like that.