NOT LONG AGO, Milly Marmur, a vice president of Random House, noticed that her 12-year-old son Nate was becoming involved in something called "D&D." "I'll be home later," he would call over his shoulder as he went to a friend's house to play D&D, or he'd vanish into his room with a school chum, and for hours they'd be immersed in D&D. Checking it out, Milly discovered what hundreds of thousands of mothers already know -- that D&D is Dungeons & Dragons, a role-playing fantasy game that transforms ordinary youngsters into treasure-hunting elves, dwarves, magic-users, halflings and fearless fighters. You can play D&D with no more than a good imagination, a handful of dice, a couple of pencils and some graph paper and an instruction manual costing five bucks. But you can also play it with a basic kit priced around $10, a series of advanced manuals at $10 each, a set of special polyhedral dice, game modules, miniature figures, character record sheets, and other paraphernalia that can bring the price of the game up substantially.

Although "youngsters" play the game, D&D is just as popular on college campuses where sophisticated advanced players map out game strategies on their math departments' already overloaded computers. Even 10-year-olds use their pocket calculators when playing D&D.

The burgeoning success of D&D intrigued Marmur as did the bound manuals and handbooks. Checking further, she discovered that D&D is the product of TSR Hobbies of Lake Geneva, Wisconsin, a company run by the game's co-creator, Gary Gygax. She telephoned Gygax. "Hello, I'm Milly Marmur, I'm a vice president of Random House, and my kid plays D&D," she began. "Would you be interested in a distribution deal?"

Random House wasn't the first to come awooing. Gygax says he had been approached by a number of publishers before Marmur's call. In 1979, TSR had sold over 200,000 basic sets of D&D, over 150,000 copies of the Dungeon Master's Guide and over 100,000 each of the Advanced Player's Handbook and Advanced Monster Manual. With sales figures like than you emerge from the cottage industry class, and smart publishers come sniffing around, wanting in. The major factor in the success of D&D was still good old-fashioned word of mouth. Not surprising when you consider that word of mouth build such fantasists as Kurt Vonnegut, Tom Robbins and J. R. Tolkein into best-selling authors. D&D has been sold mostly through strategy and game stores and hobby shops, a few college bookstores have carried it, and TSR was just beginning to get nibbles from the big chains, such as B. Dalton. Obviously, the company was ripe for a distribution deal that would put them heavily into bookstores.

But why Random House and not one of the others who'd called earlier? "It's simple," says Marmur. "We were the first publisher to fly him to New York and put him up in a hotel."

"Indeed, that was part of it," says Gygax. "Random House seemed the most interested and the most eager to go ahead immediately. Some of the others said, O.K. we'll go ahead next year. Drop in and see us if you're ever in New York. But Random House said, fly in at our expense and we'll sit down tomorrow and work it out. That impressed me."

Meanwhile, new things are happening with TSR. The corporation is introducing new games and variations on D&D and extending their markets. According to Gygax, they're in the process of setting up branch operations in Canada and the U.K. They're investigating the possibilities of introducing Dungeons and Dragons in translation, and then there's the movie. Movies? A motion picture based on a game? Sure, when you're hot you're hot. ICM, the talent agency, is close to a deal with a number of film companies bidding for the project, and 20th Century Fox is on the inside track. Gygax is working on a script which he says he hopes will be the basis of the film.

When pressed for the secret of D&D's success, Gygax concedes that it's almost certainly the role-playing. When you can choose the caracter you want and, acting out all your deepest fantasies of your own heroism, sent that character into the most fantastic and unexpected situations in search of valuable treasures; when you can see that character gain in experience and proficiency; you have not only got a profitable brain-game but a preparation for life.