There are some significant differences between them but it turns out it’s entirely possible to use them together. Here’s how.
The first difference that comes to my mind is setting. Liberty Falls was set in the Colorado in the late 19th century. The setting for Department 56 is much less definite–no particular time, necessarily, and the places that inspired the buildings vary, but they definitely extend beyond the West. Many of the early buildings in particular were clearly inspired by New England.
That said, if you want to set your village around the turn of the previous century, the mix of Liberty Falls and Department 56 will do a nice job of evoking that feeling.
The second difference, which is a bit harder to overcome, is scale. Department 56 buildings are approximately 1:56 scale, and the figures are approximately 1:24 scale. Liberty Falls figures are approximately 1:64 scale, and the buildings are closer to 1:87 scale.
This means that Liberty Falls figures, size-wise, are actually a really nice match for the size of the Department 56 buildings. There’s not a tremendous amount of difference between 1:56 and 1:64.
The difference in the size of the buildings will be a bit jarring if you place them directly next to each other. But you can also use the difference to your advantage, if your display is at or above eye level. First place your Department 56 figures and figure-sized accessories at the very front of your display, ideally with something in between them and everything else, such as a road. If you want a train in your display, put the train there too. Place the Department 56 buildings in the middle of the display, along with your Liberty Falls figures and figure-sized accessories or dioramas.
At the back of the display, behind the Department 56 buildings, stack up a few books and drape a white cloth, or even a white bedsheet, over the books so it resembles hills. Place the Liberty Falls buildings on the sheet so it looks like they’re sitting on snowy hills. If you want some figures to place around the Liberty Falls buildings so that area doesn’t look like a ghost town, pick up a few HO scale figures. The overall effect will make the display look much larger than it actually is, thanks to the effects of forced perspective. The oversized Department 56 figures look closer to the viewer than they actually are, and the undersized Department 56 buildings and even-more undersize Liberty Falls buildings look further away than they actually are relative to the size of the figures.
I suppose there’s one more difference worth noting. Liberty Falls was immensely popular in the 1990s and early 2000s, selling millions of units before the line was discontinued. Department 56, of course, is still being made.