i really like the design. the tree seems to be a little devoid of detail and i think that makes people see more an empty blotch of space rather than a tree.
this might need a bit more work but you're on the right track.
I agree with malcatrazz. Without detail in the tree, it looks almost like a road with lanes leading off to the houses. Maybe with some bark-type lines or knots, it will look more like a tree.
The rest of the design -- houses, clouds -- is perfect.
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