"If you give me sugar paper, I'll tell you a secret" – so says Lily. Here you will find it.
All Lost Items & Clerk of Green Aesperia location Tower of Fantasy 4.2 Central District Weekly Norn
The "hidden" candy wrappers for this little side quest aren't actually that hidden – they're scattered in the same spot near Lily, mostly placed innocuously near plants, Fennies, or near NPCs.
These are located in the Astra Shelter area of Aesperia – you'll find quite a few if you circle around Lynx, Lily and near Fennie's surroundings. The coordinates for this should be around (-934.3, 862.3).
You need to collect this "sugar paper" before you talk to Lily again before she mentions her "hide and seek" game with Lina and you can move on.