To be more precise: The film was supposed to have a proper theatrical release, and was the first animated film ever at Sundance, where it received rave reviews. It was destined to be a box office film for the Summer of 1987. when Disney bought the film, and intended to use it for their newly created Disney Channel. It was buried by the channel, and made it ineligible for Oscar nominations such as Best Original Score or Best Song. It then hobbled around the festival circuit, unable to find a distributor (thanks, Disney!), but it never found an audience til it was released on VHS, uncut and un-Bowdlerised. Lasseter remembers being thoroughly angry at the film's lack of a theatrical release.
In the documentary 'The Pixar Story', Lasseter states that this movie was intended to use some early form of computer animation, but because executives at the time could not see the purpose(if it neither "made things faster or cheaper"), it was shelved. Furthermore, Lasseter was promptly let go afterwards, which let to his hiring later at Pixar.
In a version made for Polish television, the entire forest scene, a crucial one in terms of character development, is edited out of the film; it just cuts straight to the waterfall scene. Apparently the scene was thought to be too scary by Polish executives, and so that left a complete Mood Whiplash in the story, and that version's Lampy with no explanation as to how she burned her bulb out.
What Could Have Been: Imagine if John Lasseter had been able to make this film as the first(?) to combine hand-drawn elements and CGI? Sadly, the idea was deemed not cost-effective enough and the tech wasn't quite there yet.