Staton Rabin from Script Magazine shares her insight on these common literary devices.
Dreams only happen when you are asleep. A dream is not the same as a MEMORY. It is also not the same as a FLASHBACK, which is one character’s memory of real, true, past events. If you have a dream in your script, it must serve a purpose. It can’t just be a lazy way to do exposition. Sigmund Freud. Dr. Freud believed that dreams fall into three categories: fears, wish-fulfillment, and “day residue” (all the real-life boring junk left over in your head on any given day). Yes, according to some, dreams may also be “premonitions,” but that usually falls under the category of “fears.” People may remember actual events from their pasts while dreaming, but the dream overall probably relates to a wish or a fear.
Dreams are an expression of the unconscious. They have “manifest” content, and “latent” content, and often communicate through symbols.
A dream is not usually a good way to show us a memory or a flashback, and it’s not reliably “real.” So it’s not the best way to reveal backstory. A dream is about a character’s fear or desire, and we can’t tell if it has any basis in reality without having context. In a dream, one thing may “stand for” or represent something else.
If you want to show us something that actually happened to the character in the past, then show us the actual event at the time it occurs, use dialogue, or (less optimally) use a flashback.
Unlike dreams, visions usually occur when your character is wide awake. Visions often have a supernatural element to them. Visions are usually a projection of something from somebody’s own mind; a kind of waking dream.
Fantasies occur while your character is awake. Daydreams are one form of fantasy. Fantasies are usually about things that are improbable or “impossible”—unlike dreams, which sometimes depict just slightly exaggerated versions of reality. Fantasies usually reflect wishes or fears, but on a grandiose scale.