When Gulliver reached the land of the Lilliput, what do you think must have been the reaction of both Gulliver and the creatures on seeing each other?

The first reaction is a level of fear on both sides. They are afraid enough to chain and bind Gulliver, as he sleeps. Gulliver, who is not necessarily afraid of his captors, is certainly apprehensive and disconcerted by the strange place he found himself.