This is the first book in the Enchanted Forest Chronicles. You may have seen it numbered four, but don't let that deceive you: it was the first published and it shows. I bought it when it was the only one and indeed in this edition, (spoiler warning highlight to see) Daystar's parents married after the sword was stolen so that she could go steal it back; that apparently got revised in later ones. It wasn't even kept in YA at the time; I bought it from the adult SF/fantasy section.
But reading it first has the advantage that you are reading along with Daystar, who is quite justly bewildered with what is happening, as opposed to knowing it from the prequels.
Daystar is living with his mother in a cottage at the edge of the Enchanted Forest when a wizard comes along, threatening.
His mother melts the wizard.
Then she, who never goes into the forest, went in to bring out this magical sword. She gives it to Daystar and tells him to go into the forest because things happen more quickly in there. And with no further ado, he is off and into the forest.
Shortly thereafter he meets the talking lizard Suz -- who has his charms, even if he does repeat whatever you said to him and then pronounce on whether you told the truth -- and who recommends his going to Kazul without being willing to tell him who Kazul is. He hears crying and finds a firewitch trapped by some bushes. Her name is Shiara, and she's rather rude but rather desperate too, because her magic doesn't work properly, and wizards are after her to see if they can study her.
They set out together, and it seems that Shiara is the only person who doesn't know more of what is going on than Daystar does. There's a reason why not, but before they learn that, they run into a baby dragon, a considerably nastier firewitch, more wizards who are out to get them, the King of the Dragons, a quozzel which is to say an animated jelly-thing, elves, dwarves, a magical key, a princess who ran away with her knight, the importance of promises, a witch with cats and a cottage with only one internal door that goes wherever is need provided you're firm with it.