Any ideas for explaining dreams to small kids?

[Again]

My 3 year old seems to dream quite a bit. He'll wake up and say something which is clearly connected to a dream he's had. This morning dh rang to ask me if I ate sweets belonging to ds. The first thing he said when he woke up was 'Mum ate all my sweets'!! and seemingly he was quite upset about it. Firstly he rarely has sweets and secondly he rarely eats them if he does get them from someone. Anyway dh's solution was to tell him I hid them so dh couldn't find them and would give them to him when I got home!!! So now I have to come up with someway of explaining it. I've tried numerous times to explain dreams, but haven't been successful. I don't want to freak him out.

I haven't had any problems like yours, but my DD is also 3 and she seems to dream quite a bit too. She usually only talks about her dreams much if they're nightmares though.
I tell her that dreams are what we see when we're asleep, that it feels real when we're asleep, but it's not actually real.
Nothing in our dreams can touch us, we can't touch anything and nothing can hurt us etc.
It's pretty basic really, but she seems to accept it.
I guess you've already had such conversations with your DS?

I tell DS that dreams are like pictures or stories in his head when he sleeps, and that they come from him thinking about all the things he's seen and done.

When he has a nightmare I do my best to reassure him that although it felt really real (he still talks about the one about snakes in his bed) that they are like a story and can't really hurt him. It has got easier as his language has developed, he's been having dreams for about a year and has just turned 4.

I think I'll try again. His language is very developed and he has a very active imagination, but still seems to be getting to grips with understanding which things are real and which are not.

A friend explained to ds that is was his imagination and his dreams weren't real. I thought it would be over his head but he totally gets in now. He even tells us what his imagination showed him in the night.