The Girl Who Drank the Moon by Kelly Barnhill

Every year, the people of the Protectorate leave a baby as an offering to the witch who lives in the forest. They hope this sacrifice will keep her from terrorizing their town. But the witch in the forest, Xan, is kind and gentle. She shares her home with a wise Swamp Monster named Glerk and a Perfectly Tiny Dragon, Fyrian. Xan rescues the abandoned children and deliver them to welcoming families on the other side of the forest, nourishing the babies with starlight on the journey.