I've been thinking about the difference between these two notions lately:
dream /drim/ Pronunciation Key - [dreem] - noun, verb, dreamed or dreamt, dream·ing, adjective
1. a succession of images, thoughts, or emotions passing through the mind during sleep.
2. the sleeping state in which this occurs.
3. an object seen in a dream.
4. an involuntary vision occurring to a person when awake.
5. a vision voluntarily indulged in while awake; daydream; reverie.
6. an aspiration; goal; aim: A trip to Europe is his dream.
7. a wild or vain fancy.
8. something of an unreal beauty, charm, or excellence.
–verb (used without object)
9. to have a dream.
10. to indulge in daydreams or reveries: He dreamed about vacation plans when he should have been working.
11. to think or conceive of something in a very remote way (usually fol. by of): I wouldn't dream of asking them.
–verb (used with object)
12. to see or imagine in sleep or in a vision.
13. to imagine as if in a dream; fancy; suppose.
14. to pass or spend (time) in dreaming (often fol. by away): to dream away the afternoon.
15. most desirable; ideal: a dream vacation.
16. dream up, to form in the imagination; devise: They dreamed up the most impossible plan.
fan·ta·sy /fænt si, -zi/ Pronunciation Key - [fan-tuh-see, -zee] - noun, plural -sies, verb, -sied, -sy·ing.
1. imagination, esp. when extravagant and unrestrained.
2. the forming of mental images, esp. wondrous or strange fancies; imaginative conceptualizing.
3. a mental image, esp. when unreal or fantastic; vision: a nightmare fantasy.
4. Psychology. an imagined or conjured up sequence fulfilling a psychological need; daydream.
5. a hallucination.
6. a supposition based on no solid foundation; visionary idea; illusion: dreams of Utopias and similar fantasies.
7. caprice; whim.
8. an ingenious or fanciful thought, design, or invention.
9. Also, fantasia. Literature. an imaginative or fanciful work, esp. one dealing with supernatural or unnatural events or characters: The stories of Poe are fantasies of horror.
10. Music. fantasia (def. 1).
–verb (used with object), verb (used without object)
11. to form mental images; imagine; fantasize.
12. Rare. to write or play fantasias.