"It's kind of built out of people's imaginations. You know how dreams are made of memories? It's like the whole world's memories getting poured into a big boiling pot to see what floats up. It's actually inside your head, in a sense. It's weird. I wouldn't be able to describe it to you, and I work there."
- Jack, Room 181
Many Pokéumans have dream messengers or spirit guides who visit them in their dreams at night with messages. In these visits the sleeping Pokéuman is transported to the Dream Dimension, where many of the dream messengers 'live' (at least for some of the time).
It is largely composed of various areas, from impressive castles, boats, and beaches to just grey scenery as far as the eye can see. Most dream messengers are assigned to an area (or, in the case of more prominent messengers such as Spiritus, more than one) that presumably corresponds to the person whose dreams they appear in. No-one is entirely sure what would happen if someone went into someone else's area. Only one person has ever done this (Jack the Quilava), but he was sent out by the area's messenger before anything risky/stupid could happen.
Apparently all dreams take place in the Dream Dimension, even for humans.
There are areas of the Dream Dimension that haven't been explored, even by dream messengers. No-one knows what's in them, but it could well be dangerous. It is believed that various creatures, created from people's imaginations, live in the corners of the Dimension, and that they should be avoided at all costs.