Storytelling is a powerful medium for young children’s development and education. Recent advancements have integrated storytelling with technologies embedded in artefacts, fostering new forms of interactions. Phygital artefacts without screens, blending physical and digital components, enable children to interact in telling and enacting stories together. This paper reports on a case study with 41 preschool children and their teachers, using hat prototypes for storytelling, with embedded programmable electronics. Children interacted with the phygital hats, exploring their inner workings, and were then invited to co-design them by imagining future artefacts. Data were processed to uncover lessons for designing future phygital artefacts for storytelling in preschools.