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.

The Daydream Aura is quite an unusual daydream dragon. Not only is he able to drop daydreams onto dragons and people, but he can also project an "aura" of the daydream he has just sent. This semi-transparent, cloudy aura can be useful in confusing enemies, though it fades away in a short while. Although The Daydream Aura rarely creates these auras, mainly due to the large mind power it sucks out of him, when he does it, it is really quite a sight.