Beauty finds out, after the Prince/former Beast told his story, that his mother's brother is actually her father, and is a King. The good fairy (and friend of the Prince and his mother) tells the story. Beauty's father, the King, fell in love with and married a shepherdess, but after she had given him a daughter, she died. The King was heartbroken but took solace in his daughter. He never knew until now that his shepherdess wife was really a fairy, and the sister of the fairy telling the story.
This sister had visited Fortunate Island in disguise, and happened to meet the King. She admired him but assumed that she, as a fairy, could never fall in love with a human. Yet she was curious as to whether she could find a king who could love a humble shepherdess. So she lived for a while in a cottage, tending sheep which were really genii and in no danger of wolves. In time she fell in love with him as well, so though any human is far below the rank of fairie, she consented to marry him.
Meanwhile, back in the kingdom, the people were dismayed at the disappearance of their Queen. The servants, fearing the King's anger, told him she was dead. The King mourned and he and his daughter were inseparable.
Yet then the evil fairy came. She too fell in love with the handsome King, yet realized he had no interest in remarrying. The fairy found a nearby princess and put her to sleep, assuming her beautiful form. She came to the King, claiming to be the princess whose husband had been murdered. She hoped that, as a widow, she would attain the King's sympathy and understanding, and eventually lead to marriage. He did appreciate having someone to talk to in a similar situation, and she requested to live in the Palace and become the guardian of his daughter. Yet the King still showed no signs of proposing marriage to her. She tried to stir up the people to insist that the King take a wife, but he refused and asked the fairy to return to her former land.
The fairy was convinced that Beauty was the only obstacle between herself and having the King for a husband, and determined to kill her. She one of the King's council members and his wife, who were willing to help her. Their plan was to suffocate her in the forest and claim she had suddenly died, too far away for help to have come.Paul Woodroffe
However, the Queen fairy had pleaded with her sister (the narrator) to watch over her husband and daughter (this summary would be a lot easier if they all just had names...). So she secretly kept watch, and took the form of the bear when Beauty's kidnappers entered the forest with her. The fairy killed the murderous couple, and left Beauty's clothes, covered in blood, so that the evil fairy would not suspect that she was still alive.
The fairy found a house in a small village, where an infant had just died. The fairy replaced the infant with Beauty, and in the morning the nurses rejoiced at the sick infant's sudden recovery and took her home to her father, a merchant. The fairy went with, and gave a prophecy to him, giving Beauty her name and telling him that she would save his life and bring fortune to the whole family. (Earlier in the story, when Beauty determines that she will go to give her life for her father's, he remembers this prophecy, and is one of the reasons he allows her to go.)
The King was grieving once again, and the evil fairy renewed her marriage proposal, but he only replied with scorn again. The narrator fairy asked a powerful fairy to protect the King. The princess whose form the evil fairy had stolen woke up, and the evil fairy returned to the Prince, where she fell in love next with him, back in part I.
Beauty grew as one of the merchant's children, with the good fairy watching over her secretly. This fairy also happened to read the Magical book that recorded the fairies' acts and discovered the evil fairy's proposal to the Prince, and the conditions for the undoing of the spell. She revealed this to the fairy Council, and the evil fairy was imprisoned. The good fairy later arranged for Beauty to come to the palace under the right circumstances, and both Beauty and the Beast fulfilled the conditions to be released from the spells of the evil fairy.
By the way, Beauty's mother had just been released, after going a very dangerous ordeal called becoming a Serpent, which gives the fairy who survives it greater rank and power, so she was reunited with her husband and daughter as well.