This nebula - SH 2-142 - is closely associated with NGC 7380 which is an open cluster of young stars. The Flying Horse (aka Wizard) is an emission nebula illuminated by these stars. This system is about 9,700 light years away.
The Wizard Nebula is a nebula located about 8,000 light years away towards the constellation Cepheus. It is the cloud of dust and gas out of which is forming an open star cluster, NGC 7380.
NGC 7380 is about 4 million years old, young for a star cluster. It remains embedded the cloud from which it formed. In this image, light emissions from hydrogen, oxygen, and sulfur in the cloud are colored green, blue and red.