Imagination is the lifeblood of children's literature. It fuels every magical, multihued world a child embarks upon, every heroic journey they embark on, and resonates within every life lesson they imbibe. In the boundless landscape of children's books, dreams hold a special position. They possess a unique power to intrigue, entertain, educate, and even spook, becoming the perfect playground for young imaginations to revel in.

The Dream Dictionary
Dreams in children’s literature often serve as cryptic messages left to be deciphered. They are a deep well of symbolism, metaphor, and foreshadowing. Just as certain dreams in real life have been interpreted to symbolize various thoughts, emotions, or predictions about future events, dreams in literature play a similar role, providing insight into a character's psyche, predicaments, or potential paths. An example of this can be seen with characters like Ron Weasley from the Harry Potter series who dream about events that later take place or hold symbolic significance.

The Magic Doorway
In many stories, dreams are a gateway into parallel dimensions, fantasy realms, or past and future times. This idea is most famously encapsulated in Lewis Carroll’s 'Alice in Wonderland', where a dozing Alice tumbles into a dream world filled with absurdity and marvel. This tradition of using dreams as a portal to fantastical realms emphasizes the theme of escapism and promises endless adventure to young readers, sparking their inquisitive nature and fostering creativity.

The Insight into the Character's Mind
Dreams reveal the hopes, fears, conflicts, and insecurities of characters, offering an intimate glimpse into their minds. Many authors use dreams as an effective vehicle for conveying character development or conveying aspects of their personality discreetly. They may showcase their unspoken desires or fears that even the characters themselves may not be aware of. Such psychology-intense storytelling can be seen in Roald Dahl’s 'Jame's and the Giant Peach', where dreams serve as a window into James's desires and his longing for a family.

The Premonition
Dreams in children’s literature can often foreshadow future events, creating suspense and anticipation in the readers. This prophetic quality of dreams can also function as a narrative strategy to build tension and excitement. Characters might dream of ominous warnings or positive revelations that significantly influence the course of the storyline.

Understanding the psychology of dreams in children’s literature enriches the reading experience, adding layers of depth to seemingly simple stories. They serve as a silent, yet powerful narrative tool that influences the course of the story, adds dynamism to the characters, and impacts the readers' perception. Dreams create a textured reading landscape where reality blends with fantasy, and an ordinary story evolves into an unforgettable reading journey.