This picturesque little town, nestled on the shore of Lake Ontario, is home of the Shaw Festival. Until Christopher Newton took over as artistic director, the troupe and the audiences had been content with complacent, albeit often sweetly rendered, stagings of works from the considerable output of the renowned critic, playwright, and philosopher in whose honor the festival is named. Paradoxically, Mr. Newton came in with a declared antipathy to anything Shavian, and with the express idea of turning this quaint little festival on its ear. Five years later , he has pulled back from his - by Niagara on the Lake standards - radical stance. Shaw still has a niche in the festival makeup, although his contemporaries are being even more heavily featured than in the past. The company is putting on seven major productions this summer and several interesting evenings of unusual fare, including a one-time-only dramatization of George Orwell's ''1984.'' The festival has been in the black for the past two seasons.
But the best news of all is how well the acting company has come together as an ensemble. This is no longer a hodgepodge troupe, with some good performers peppered in with poor. In contrast to former years, there was never a sense, in the three productions I saw, of a director in search of even the faintest idea of what the play in question is all about. In all three evenings - Thornton Wilder's ''The Skin of Our Teeth,'' GBS's ''The Devil's Disciple,'' and Noel Coward's ''Private Lives'' - there was an assurance, a style, a consistency of viewpoint that was carried throughout the evening.
''The Skin of Our Teeth'' is the most problematical of the three plays to pull off. It is basically a plotless, not always upbeat paean to human survival. It fills three acts with improbable high jinks (and some lovely lampooning of theatrical devices). The ''action'' centers on the Antrobus family - pseudonyms for Adam, Eve, their progeny, and serpent, masquerading as Sabina the maid. The audience is witness to adversity and survival firsthand, but through it all, man manages to muddle through - albeit by the skin of those proverbial teeth.
It is the director's duty to try to make the audience believe all the mishaps are spontaneous, and at this Mr. Newton has succeeded. The pace never lets up. The farcical goings-on are never overplayed. The forward-moving energy and the essential seriousness of the message were unflaggingly sustained throughout the three acts.
He has coaxed a dazzling tour de force performance from Nora McLellan as Sabina. She looks delectably '40s-ish; every gesture communicates something specific; every line is delivered with control and zeal; the personality of the character leaps out to the far reaches of the theater. The rest of the cast is impressive as well, and designer Michael Levine has done the miraculous in creating a distillation of the neon-and-gaud of Atlantic City in its conventioneering heyday.
In short, ''The Skin of Our Teeth'' receives a vital production, reminding us anew how skillful a man of the theater Wilder really was. Behind the apparent homespun corn was a profound humanist who cared what road mankind would take in its quest for fulfillment.
''The Devil's Disciple'' is hardly so provocative and philosophical a play, and director Larry Lillo has decided to stage it as the elegant melodrama it really is. Cameron Porteous's imposing set, enhanced by Robert Thomson's atmospheric lighting, has created a unit framework for the four scenes of the drama. It also allows for a clean, uncomplicated playing space for the large and generally excellent cast. Here is the sort of ensemble performing that was being nurtured in past years and has finally come to fruition. If some performances are not as strong as they might be, others compensate.
The recently closed ''Private Lives,'' a holdover from last season, gave artistic director Newton a chance to act as well, and his Elyot was drolly, slyly underplayed. Denise Coffey's deft staging struck a good balance between stylized gesture and frenetic movement. It neatly skirted the dangerous abyss of shallow gesture and bellicose vulgarity that so often undermines North American productions of Coward (or any other British comedy, for that matter).
The Shaw Festival season runs through Oct. 14. Eugene Labiche's ''Celimare,'' Shaw's ''Androcles and the Lion'' (''Private Lives' '' replacement), and Coward's ''The Vortex'' have entered the repertoire. The seventh production, the Jerome Kern musical ''Roberta,'' runs all season. Mr. Newton has found the balance between theatrical creativity and keeping his generally conservative audiences happy. It is quite a success story, particularly in Canada's currently troubled theatrical times.