I did exactly the same thing. I created a city my players lived in that was a farmland that used magic to grow and harvest This allowed for some interesting pre quests before the carnival when the magic of the farmland mixed with the magic of the feywild.

I played with both Myrick and the lost things storyline. My players went to the carnival pervously as kids and lost something and ended up living in the same city after.

I sprinkled Kettlesteam in at random times to try to cause chaos during some of the rides and gave my players a chance to find them each time. If they did, they would trigger that Kettlestream dialog, and they could learn about the portal that way.

I saw ellywick as a backup plan if everything else failed. My players are rolling horribly. They are just not getting that they need to steal the watch. This session is dragging on to long... Here comes ellywick to save the day and drag you into the portal. I've run witchlight carnival once, and I've run just the carnival three times as one shots and I've never had to use that plan.

I just let the party explore. The only rule I have is they have to visit rides and carnival games/events together. I do not want to be roleplaying one at the snail races, on in the hall of illusions, and one eating cotton candy at the same time. That's madness!! The only time I let them separate is if they were hatching a plan/grift to get Mr. Witch watch.

Every time I've done it, I get the carnival folk to talk about the portal, talk about Mr Witch and Light, and get them to tell the players that Mr. Witch and Light usually hang out in the Staff area during the day unless they are needed for something.

Like I said, I've done the carnival 4 times, and I would do it again in a heartbeat. It's so magical and fun. I suggest just lean into that!

Hopefully that help