The last time her mother saw her young daughter, she was walking towards the other adult, who was in the garage right next to the house.
"However, before she reached them, she has obviously decided to turn around and head in the opposite direction.
"During this time, both sets of people ... assumed that she was with the other one," they said.
"Approximately an hour later, upon her mum's return, it was noticed she and the family puppy were not at the house.''
Family members immediately started to search around the house and their own property before branching out into dense bush to find her.
She would be found safe and well about 3km away from her home at 11.20pm - with the family pup.
Nelson Bays Area Commander Inspector Mat Arnold-Kelly said good teamwork from everyone involved had got the result everyone was hoping for.
"Police - many of them off-duty - LandSAR volunteers and locals immediately launched a search for the child.
"After hours of searching, one of the SAR members spotted the child and her puppy in the bush at least 3km away from the family's home.
"The girl and the puppy are fine and in good spirits and are obviously very happy to be back with family.''
Arnold-Kelly thanked all those involved, including 10 neighbours who came to the aid of the family and also helped in the search.