Thanks for your responses . . .
It is the Magic Faraway Tree. Really appreciate your help!

Any idea when it would have been published, Ryan?

This sounds like The Magic Faraway Tree or The Enchanted Wood, by Enid Blyton...

So my parents used to read this book to me when I was young. I think it was intended for 4-7 maybe? All I can really remember is it was about a child (I think it was a girl) who was climbing this tall, magical kind of tree. Each chapter dealt with her at a new level of the tree and meeting kind of elfish/animal poeple who lived there. I remember one chapter involved someone being really angry because the person above him kept pouring water from above.

Any help would be greatly appreciated! I have looked everywhere with no luck trying to find this book. Thanks!