(Given that, over the months since I began it, this series has become less about the art of pulp fantasy stories and more about the stories that influenced the development of early D&D, I have renamed it accordingly. I'll be going back and editing previous installments to match the new nomenclature in due course.)
I am always hesitant to claim that any single book provides the key to understanding Dungeons & Dragons. Even if I weren't, the 1973 L. Sprague de Camp novel The Fallible Fiend certainly isn't such a key. Nevertheless, I think it qualifies as a key, at least if you're interested in the specifically Gygaxian origins of the game, as I am. Reading it, one is hard pressed not to see why Gary singled it out by title from among all the tales set in the world of Novaria, a parallel world whose culture is a melange of classical and medieval influences and for which our Earth is its afterlife. Though clearly a pulp fantasy, The Fallible Fiend is also a satire, particularly of politics, both generally and of America. Consequently, like a lot of early fantasy that influenced the game, this novel remains connected to our world even when it's describing very otherworldly things.
The novel's plot concerns the picaresque travels of Zdim, the eponymous demon from the Twelfth Plane who is summoned to the Prime Plane to fulfill a contract with a human sorcerer by the name of Dr. Maldivius. Zdim not only has no interest in leaving his demonic realm for servitude, he's also very bad at being a servant, as he is literal-minded to a disturbing degree. After this flaw results in the death of Maldivius' apprentice, his contract is sold to a succession of new masters, each of whom finds Zdim's willingness to give them exactly what they ask for to be more trouble than its worth. As his contract is passed on, Zdim visits different lands and interacts with new people, allowing de Camp the opportunity to show off his wit and comment on the human condition. I wouldn't claim that any of the commentary is deeply insightful or original, but some of it still has bite, in part because it's not solely about the real world but also about the fictitious one of Novaria.
The Fallible Fiend is an important book in understanding the kind of world Gygax saw as a typical one for D&D. Novaria is a parallel Earth in that there are lots of obvious historical and cultural similarities, but they're echoes rather than mirror images, even twisted ones. Consequently, the geography is different, as are the nations. The flora and fauna are similar, but, again, not identical, with extinct species, not to mention fantastical ones, mixed in with the more mundane ones of our world. Magic exists and follows clear rules. There are gods who interact with human beings, just as there are demon planes from which such fiends may be summoned and bound into servitude. I found myself thinking of Greyhawk when I recall Novaria and I don't think that's an accident.
In all the discussions and arguments about which books and authors were most influential on D&D -- short answer: not Tolkien -- it's fascinating to me how often L. Sprague de Camp (and Fletcher Pratt) get overlooked. I grow ever more convinced that his stories played a very important role in the development of Gygax's conception of the game and his assumptions about how it would be played. De Camp was, after all, active as a writer over a long period of time, from Gary's youth all the way into the days of the pulp fantasy revival. I don't think it's a stretch to imagine that Gary retained a fondness for de Camp's work born in his younger days. Indeed, the evidence from things like Appendix N and early issues of The Dragon makes it very clear to me that he did hold de Camp in high regard and was strongly influenced by his ideas. Even from the brief summary of The Fallible Fiend I've given in this entry, I should think the connection is apparent.
I'm not yet ready to argue that de Camp's work is a Rosetta Stone for decrypting Gygaxian D&D. For one, as important as it is, I don't believe any single author held that place among Gary's influences. However, I think de Camp bears closer reading with an eye toward the question of what may have been an influence over the development of the game. I suspect we'll be surprised to find more there than has previously been supposed.