Dreams are encounters with dead things that generally happen in the Nonexistent Dimension. They are always daydreams, and happen in the midst of battle, or, in the SSFCYOA video, right before a battle. In the videos, dreams are generally depicted in black and white.
In Praesent Terrarum, during the Seren battle, Guthix visited you (well, you had a flashback) and told you to "never, under any circumstances, harm a female"
In SSFCYOA, while learning the Gaze, a Ten Minutes Later screen appeared, the backround of which was The C. This could have been a dream.