A grand restaurant in a small town is more than a place to eat; it can become a whole economic ase for the town. Just as Washington, D.C. is populated with lobbyists, lawyers and hoteliers who are there because it is the nation's capital, Washington, Va., 65 miles away, is developing a web of commerce around it renowned Inn at Little Washington.

In 1978, before the Inn opened, there was no restaurant in town and only one place to stay overnight -- a third-rate motel. Now there are at least nine bed-and-breakfasts, not to mention a cafe, a farmer's market/health food store and several new crafts and souvenir shops. Even greater, though, is the change in the agricultural life around the Inn.

Patrick O'Connell, the chef, and Reinhardt Lynch, the maitre d'hotel, began with a one-acre garden, having moved to Rappahannock County in 1972 "when we were poor hippies," said O'Connell. They trucked their produce to Washington, D.C., health food stores, and they cooked it for friends. "That's how it all started," reminisced O'Connell. "I looked and there were 14 at dinner . . . I would go out to the garden rather than to the supermarket." And people would stay overnight in their four bedrooms. Their enterprise grew into a restaurant as they moved it into a former crafts shop which, along with a church, formed the tiny town's version of a main square.

People started bringing little gifts -- flowers, tomatoes grown from locally developed hybrids. Faith Mountain Herbs farm in nearby Sperryville was just getting started; it began to plant in quantity those herbs the Inn expected to need in the coming year. Now it does a booming mail order business. George and Sally Sharp took to inquiring how ripe O'Connell wanted their nectarines, and what hour he wanted them picked.

"It was like the Stone Soup story," recalled O'Connell. "It's not unlike Sonoma County (California) eight years ago."

At first it seemed nearly impossible to communicate what he was doing. "It was almost like opening a Hindu restaurant," he said. Now it sometimes seems that the entire town is involved in some way with the Inn.

Diane Welte dries tomatoes, apples and apricots for the Inn, and is experimenting with non-alcoholic elder flower champagne. The Inn is providing an outlet for several such experiments. Miriam Harris now makes two kinds of cheese exclusively for the Inn, playing with such variations as caraway seed.

And the staffers have begun their own elaborate gardens. Lynn Crump "loves the bizarre," said O'Connell. So she grows round zucchini for the Inn to use as soup bowls.

Mattie Ball Fletcher -- who is always called Mattie Ball, no more no less -- is one of Little Washington's most senior citizens ("Some say she is close to 100"), and the recipe for her famous candied grapefruit peel is one of its oldest secrets. She began to provide the Inn with it. One of the Inn's kitchen staff, Carolyn Pullen, who is also known to have the largest shiny pickup truck in town, began to go by Mattie Ball's house daily to check on her. Now Pullen has been taught the secret grapefruit rind recipe, so that she is the one who makes it -- but in secret. She is "not allowed to pass this on willy-nilly," warned O'Connell.

Theresa Reynolds had been baking bread for years at home, where she was tied down with a writing career and small children. With the Inn she developed a walnut-rye loaf to accompany its cheeses. "She runs it over" three times an evening, said O'Connell. Sometimes it is brought by the children. If he needs more bread, he rings her phone number one time and hangs up.

The minister's wife, Molly Hobson, has learned that the Inn uses nasturtiums in its salads and as a deep-fried accompaniment to its softshell crabs, so she shows up with maybe 500 of them, explaining that she just had to trim her plants.

And Shenandoah Fisheries consulted with the Inn to develop its applewood-smoked trout, then began smoking chickens, duck breasts and cornish hens as well. The Inn's hams come from Tom's meat market in Culpeper, which has adapted the cure to O'Connell's taste.

Neighbors arrive at the door with wild strawberries or golden raspberries. Children appear with blackberries. "There is sometimes a stream of them at the back door," said Lynch. One day a couple of boys, not more than 9 years old, showed up with rabbits and crayfish. Did the Inn want anything else, they wanted to know. "What else have you got?" asked O'Connell.

"I seen a dead dog on the way," answered one little boy. Tabletalk Green peppers used to be considered gentle things. Then we had to begin distinguishing green bell peppers -- sweet and mild -- from fiery green peppers such as jalapenos. Now, to complicate matters, we are going to be seeing fiery green bell peppers, called Mexi Bells. They look like the mild kind, though their skin is thinner. But they pack a punch -- not as hot as jalapenos, but enough that you wouldn't want to catch a chunk in your salad without warning. California winemaking is a pretty crowded business. But I hardly realized how densely populated it had become until I saw the "1985/86 California's Wine Wonderland" guide to wineries open to the public. The listings, organized by county, fill nearly 30 pages. About a decade's worth of visits for the oenophile tourist, I'd say. The booklet is free if you send a self-addressed business envelope and 56 cents postage to the Wine Institute, 165 Post St., San Francisco, Calif. 94108. CRAB AND SPINACH TIMBALE INN AT LITTLE WASHINGTON (8 servings)

FOR THE CRAB MOUSSE:

3/4 cup whipping cream

1 teaspoon lemon juice

1/2 teaspoon dijon mustard

Dash celery salt

Dash of cayenne pepper

5 eggs

Salt and pepper to taste

1/2 pound all lump, backfin crab meat

FOR THE SPINACH TIMBALE:

2 pounds fresh spinach, washed

3 tablespoons unsalted butter

2 tablespoons flour

3/4 cup milk

Pinch of freshly grated nutmeg

To make crab mousse, whisk together in a bowl 1/4 cup whipping cream, lemon juice, mustard, celery salt, cayenne pepper, 2 eggs, salt and pepper. Pick over crab meat to remove any bits of shell and fold together with the egg and cream mixture.

To make spinach timbale, drop spinach into boiling, salted water and return to boil. Drain and rinse with cold water. Squeeze dry and chop finely.

In a heavy-bottomed saucepan make a roux with butter and flour, cooking and stirring 2 minutes without browning. Whisk in milk, remaining 1/2 cup whipping cream, salt, pepper and a pinch of nutmeg, stirring constantly. Bring to a boil, remove from heat and add the chopped spinach. Allow mixture to cool slightly and beat in the remaining 3 eggs.

Half fill 8 buttered 5-ounce timbale molds with the crab meat mixture. Use the spinach mixture to fill the molds the rest of the way. Bake in a shallow pan of cold water in a 375-degree oven for 25 to 30 minutes until set. Unmold and serve. Timbales can be served with a sauce such as beurre blanc if desired.