It's a children's tale apparently given the music that doesn't go dark and menacing when they stumble on each other but stays cheerfully and peppy instead. Which makes it kind of strange to see such a grumpy looking, chain smoking, old guy when Cloud finally finds the source of the noise. Usually children's tales have... children in them?

So... maybe the guy in front of him is the harsh grandfather/step-father type that throws the children out of the house and into a world of adventure instead. Which doesn't make sense if he's the one out here in the woods. Since the guy isn't going for a blunderbuss or anything awkward like that Cloud feels safe in plopping his furry butt down to sit in front of the man.

The oboe gives a honk.

And since it's a children's tale of course all animals can talk.

"What the happy is going on?"

Children's tales apparently also censor cursing.