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.

"Lunatic" has no name. Maybe. Officially, the "Name" field in the daydream's census record is blank, but she seems fine with people calling her Lunatic. She is forgetful, and she has an absurdly short attention span, often unable to stick with a topic of conversation for longer than a shake of the tail before changing subjects. Still, despite the urging and criticism from other dragons, it seems nothing can sadden her. Some larger dragons have tried to eat her, thinking her an easy target, and she nimbly sped away on her cloud, still smiling. Many figurative phrases that the local humans have apply to Lunatic: her head's in the clouds, she's an airhead, her memory's cloudy, she's on cloud nine.