I believe mostly that dreams are related to sub-conscious experiences and events, usually it is something that has happened or that you have seen but only registered at a sub-conscious level, or generally something that is playing on your mind. Our own minds interpret these events and visions in our own way, although there is a great degree of belief that the human mind develops generic dream patterns for certain events and emotions, hence people constantly looking for the underlying meaning of dreams or a dream. Sometimes, the dreams are pure imagination and fantasy, perhaps dogs and babies dream in fantasy or memory realm, who knows.
There are also types of dreams which may be spiritually or ethereal, such as the ones where you experience a d�j� vu moment, and realise you have dreamt it in the past.
Its all in the mind you know.