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.

Bluetail the Dreamspeaker is an odd daydream in the fact that while he daydreams he tends to have prophetic dreams. He can also tell what another dragon's dream means and this has earned him a great spot in the cave. However he is a little eccentric and when dragons ask him about strange happenings he either talks about a non-prophetic daydream he is having at the moment, or when he has had a prophetic dream he speaks in verse. This drives the other dragons a bit crazy as it means in order to understand they first have to decode his cryptic poetry.