DS ended up in our bed last night several times due to a "singing crab" that appeared in his room. We spent all morning trying to explain what dreams are but he's still confused and scared. We couldn't help but laugh.
DD 'gets' the tooth fairy idea, so we tell her there's a 'dream fairy' who sometimes comes while you're sleeping to give you things to think about while you're asleep. Sometimes they are silly things, sometimes they are scary things (DD gets nightmares at times) sometimes they are just boring things!
Re: How do you explain dreams to your preschooler?
I told DS that they're stories that his head thinks up while he's sleeping and they're not real.
It didn't help much, though. But that was the best I could do.
I was going to say like in Cinderella "A dream is a wish your heart makes," but a singing crab sounds more like he's been watching Little Mermaid.
I tell DS that dreams are like movies and stories.