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.

BlueSpyro drifts onto clouds and messes with humans, and other dragon's minds. His favorite thing to make dragons do is to act the exact opposite of what they're supposed to be. For instance, a Sunrise Dragon would act like a Sunset dragon. With humans, for his advantage, he makes them bring him gold or treasure. Some may call him vain, others may call him wise. Either way, dragons and humans hate his power which makes him sad and lonely. Sometimes he will leave his cloud for . time though. Once while flying around a cave, he met an older female Sunset Dragon hatchling named Black-Hole-Sun. Him and her would spend hours together. He cast over one of his daydream spells on her and she actually enjoyed it. When she became an adult, they fell in love and have been mates ever since.