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.

Lucy has the uncanny ability to induce daydreams that can turn into lucid dreams. The dreamer starts daydreaming, then thinks he is awake again and experiences everything in the dream as if it were totally real, until he realizes he is dreaming. Lucy is known to help others with such dreams, as a means to simulate events before they happen, for example to determine the best course of action in a difficult situation.