The Dream Realm is a magical realm inhabited by mythical creatures such as Unicorns, Centaurs, Faeries, dragons, and the like. Each night one child is made the ruler of the Dream Realm. Each ruler comes into the realm, shapes it to their imaginations and desires, and has all of the realms mythical creatures at their command before departing to make way for the next ruler.
When Damiella grew particularly fond of a ruler named Morgan, she revealed to her the truth about the cycle of rulers. Distraught by this truth, Morgan mutilated the land, created Monsters to attack the inhabitants, and eventually cast them out. With help from Hairball 2 and the Pet Avengers, Damiella was able to save the realm and send Morgan safely home.