Axle, 3, the boy who went missing from his home in Tolaga Bay yesterday, was found around 3km from his home and "wanting his mum" this afternoon, Tairāwhiti Area Commander Inspector Sam Aberahama said.
He said it was a very emotional moment for the family and those who volunteered when Axle was reunited with his family.
Police were concerned for Axle's welfare overnight, saying "there was a fair bit of pressure" on search teams.
Axle was examined by a nurse and taken to Gisborne Hospital, Aberahama said he thought he was in good shape.
"We held out huge hope. There were lots of people coming. If they couldn't offer to search, they were offering food," he said.
"I never thought at any time we had lost hope. Certainly, time was against us."
Police said there were assumptions about Axle's whereabouts before he went missing but Aberahama said police were happy with their response time.
He acknowledged that children can go walkabout and advised parents not to assume on where their children are and to make sure.
"At the end of the day, I come back to the fact there is no issue about the delay," he said.
"We're just happy with the outcome."
Axle's dad Glenn was awestruck and emotional this evening when asked about how the family was feeling after his son was found.
Glenn said any parent would know how difficult the 21 hours he was missing had been for the family.
"I can't put it into words," he said.
"There were hundreds of people searching, some people were even jumping into the river at 10.30pm yesterday looking for him.
"If I had to put [how we're feeling] into a sentence it'd be that I wish every community in New Zealand was like this. They were amazing.
"It was unreal. I expected him to be dead," he later told RNZ's Checkpoint.
"When your child goes missing you can't sleep, you can't get warm. Every time you get cold you go to put a blanket on, you think how could I do that when my child's freezing? That's what happens.
"He's three years old in a nappy and t-shirt. Like I've said to everyone, if that was me last night in my undies and a t-shirt I would be dead. I'm not joking saying that. I don't know how he did it.
"I just told him how much I loved him," he said.
The dog owner who last saw 3-year-old Axle playing with his pet has recounted the heart-stopping moment he realised the boy had vanished into rugged East Coast bush.
Damon Jeffery said he didn't sleep a wink last night, fearing the worst and determined, like so many in the Tolaga Bay community, not to stop looking for little Axle until they found him.
Jeffery had been the last person to see and hear the little boy who had been playing with his white dog Bro while he worked inside his bus.
"Then all of a sudden they were gone," he said.
Since 1pm yesterday, Jeffery has been searching high and low for the youngster - desperately trying to retrace the preschooler's steps.
"I went everywhere. I looked - honestly - I looked. The chopper looked, the police did. It was unreal how far out he was."
To everyone's relief the lost child was spotted by a Tolaga Bay resident on a hill face in rough terrain about 4km from his home at 10.45am.
Gisborne man Gareth Hailey, who was fencing in Ruatōria and helped with the search this morning, said about five people had been searching for the boy in the thick bush when one of the men heard a voice.
"He heard a kid's voice so shot up and saw him jump out of the bush basically."
Axle then started asking the rescuer for his mum.
"He was just wanting his mum. All he was asking for was his mum."
He was then driven home in a ute and was sitting in the passenger seat on a woman's - understood to be a family member's - lap.
Hailey said the search and rescue organisers had just been about to send volunteers up the track road to start combing through the dense bush when word got out that the boy had been found.
"Everyone was pretty elated, pretty relieved."
Hailey said he was one of many volunteers who had decided to help with the search as he had been unable to sleep last night out of concern for the little boy. He joined friends from Gisborne who had stopped working early on Tuesday afternoon to help with the search.
An emotional Jeffery said he had to wipe away tears when he saw the 3-year-old walk down the driveway and be reunited with his parents just before 11am today.
Axle's mum clung to her son after being beside herself with worry.
Utter relief could almost be felt in the air as more than 100 volunteers cheered and clapped as they watched, with tears streaming down many of their faces, Axle being returned to his parents safe and well.
"I can't even imagine the relief that his parents are feeling right now. Just the look on their faces when they seen him turn up. It's an unreal moment. I had a tear myself.
"If he hadn't fallen, I would have thought hypothermia would have caused some damage. But he's happy, he's healthy, he's smiling. He's having some food and everyone is just so relieved."
Axle's dad told Jeffery the relief he was experiencing was incredible, saying he felt 100 per cent better.
The boy's speech is still limited so what he did for the 21 hours while he was missing - including in the blanket of darkness - remains a mystery.
Axle had been climbing up a steep and remote hill face in a neglected logging area at the back of Paroa when he was discovered walking on the face of a hill by one of the scores of residents looking for him.
The Tolaga Bay man scooped him up and brought him back to his parents.
It was part of a major search involving local volunteers, police, helicopters and drones which had been underway since the 3-year-old disappeared from the Paroa Rd property with a small dog in tow just before 1pm yesterday.
Just prior to Axle being found, Jeffery and another man had driven along the track looking along the steep terrain and calling out his name.
He said the area was rugged and at one point he even feared he might fall to his death as parts of the earth below him gave way while they hunted for the boy.
Jeffery returned back to the property to be interviewed by police just in time to see the boy being reunited with his family.
He was in utter disbelief at the distance Axle travelled in the steep terrain, saying he would have walked onto the paddock in front of the property before being found some 4km away along the gravel track.
"I can't believe how far out he made it and I can't believe that's he back completely fine."
Axle's parents had been largely based at the property helping police with information and waiting anxiously in case he returned home.
Jeffery said no one slept last night as they feared for the little boy's safety.
"We didn't stop. We just kept looking and looking. You have to have a lot in you to stop looking for a 3-year-old that is missing."
The community rallied together to bring the little boy home, he said.
Axle's family had only moved to the area a month ago and had also been caring for a newborn.
"The parents are forever grateful for everybody involved and everybody who sent their prayers and stuff like that."