Conradin is a 10 year-old child who lives with his guardian, Mrs. De Ropp. Despite of being his cousin, Mrs. De Ropp dislikes Conradin a lot. 

Conradin's life is very sad and miserable. He is sick and expected to die in less than five years. His guardian seems to be "counting" the days until this happens. Moreover, she "thwarts" Conradin consistently, forbids him to do things, and smothers him in many ways. 

Mrs. De Ropp dislikes Conradin, but Conradin detests her just as much. The condescending way in which the boy is treated in the house, the daily boredom, dullness, and his impending death, are all indicative of an extremely sad existence. 

It is no surprise that Conradin's only escape is his imagination. It is through his imagination that Conradin found a way to escape from his daily, ugly life.

One of these days Conradin supposed he would succumb to the mastering pressure of wearisome necessary things---such as illnesses and coddling restrictions and drawn-out dullness.

It is thanks to his imagination that he was able to stand his environment. He even chooses who gets in our out of his musings. His cousin, for example, is off-limits to Conradin’s imagination. His mind, and what he makes up, are his entire “world.” It is clear from the narrative that he would have not made it under his current conditions without some outlet. 

Without his imagination, which was rampant under the spur of loneliness, he would have succumbed long ago.

Therefore, the answer to this question is that, as it happens with many other individuals, life not always is “good.”

In Conradin’s case, life was less than good; it was awful. All that was wrong about life was happening in Conradin’s home: no love, no real family, no support, no good health, no joy of any kind and, especially, no motivation. What do we do, as humans, when we lack all of these things? We either live with the despair of not having them, or we find ways to make up for them.

Conradin found a way to make up for what he lacked in terms of emotions by placing his affection in other objects: the hen, the ferret, the empty shed. He really had no other way to fill the void in his life. That is what his imagination represents: The substance that makes up for everything else that he lacks.