Upgrade Halloween items by dropping items onto the board such that 3 or more of the same type items are beside each other. Keep upgrading until you create the last item in the recipe list (at top of screen). Try and merge items as soon as you can so that the board doesn't fill up.
Tap or click a blank spot on the board to place the item shown in the Next box.
This video is the solution for Halloween Craft game. Here you will find the answer for each level of the first Halloween Craft game.