In "The Secret Life of Walter Mitty," to what extent has the author succeeded in weaving stories within a story?
Each of the stories woven from Mitty's conscientiousness into his subconscience are connected in almost a Freudian manner. The dreams are his unconscious desire to free himself from the bonds of his emasculating life.
I have to agree with #2 - the author of this rightly famous short story has worked incredibly hard to allow each of Mitty's fantasies to phase into reality and then back into fantasy again effortlessly. Note that there are some similarities such as the pukka-pukka sound he hears in his fantasies, but also the way that the fantasy life impinges on reality and vice versa. A wonderful example of lots of different stories within a story.
The story within a story also centres around showing the tragic demise of a man. Mitty personifies the aging middle class man for whom the call to arms for the Second World War did not apply. The tragedy of Mitty is in the almost reality of his fantasies - each with a vestige of truth yet still radically removed from his current reality. As an audience we are caught up in each fantasy and catapulted back to reality along with Walter himself, and we understand his desire to face death valiantly at the end as an escape from the drudgery of his real existence.
Thurber does a masterful job of weaving Mitty's fantasies into his reality. His daydreams don't just appear out of nowhere. Each daydream springs from some activity that is taking place at the time in Mitty's day. For instance, the story begins with one of Mitty's daydreams in which he commands a huge, powerful hydroplane through a storm, pushing the engines to maximum power. In reality, he is driving his wife to town at a "breath-taking" speed of 55mph. Mitty lapses into another fantasy, in which he performs as a brilliant surgeon; this daydream begins after he drives past a hospital. This is the structure Thurber follows throughout the story, moving the reader smoothly, back and forth, between Mitty's exciting world of his daydreams and the drab reality of his life.