Daydream Dragons are the hosts of daydreams and fantasies. They spend the majority of their time sitting on clouds, dropping daydreams down into the minds of people passing by. Humans who live near Daydream Dragons must be especially careful not to let their thoughts wander, or they could end up spending hours or even days in a trance-like waking dream state.

Dragons are highly-intelligent reptilian creatures that—from a human perspective, at least—appear to live forever. Many different varieties of dragon exist, each with their own unique qualities, habitats, and behavior. Adolescence in dragons is usually marked by the growth of a hatchling’s wings, although not all breeds of dragons grow wings and some breeds have other traits that indicate the beginning of maturation. In Galsreim, dragons and humans coexist peacefully.

James is widely known for his joviality and for his harmless pranks. His pranks include stealthily stealing an object, whether it is a meal, a passerby's hat, or a chest of gold, and returning it some time later. He also chases other dragons around, making scary sounds, and also bullies others.

However, his prankster lifestyle changed with the advent of meeting, and falling in love with, another dragon by the name of Lovely Lily. Although still jovial, James has learned to behave under the watchful eyes of his mate.