Sorry, but the "dream" element is purely an invention of the Judy Garland movie; there was nothing about it in any of the books.
That was the gist of what I said: Baum never explicitly said ANYTHING about whether it was a dream or reality until
The Emerald City of Oz, at which point he
did come down
decisively on the "reality" side. We can speculate all we want to on what was in his head for the first four books (and Dorothy's complete absence from The Land of Oz is certainly suggestive that he was
not thinking "dream"), but until Aunt Em and Uncle Henry lost the farm (at the beginning of
The Emerald City of Oz), and Dorothy arranged for Ozma to transport them to Oz (via the Nome King's Magic Belt), and Dorothy and her family all became permanent residents, the books all made perfect sense as either fairy tale or dream fantasy. Indeed, in Chapter 2, Baum even acknowledges the ambiguity:
Aunt Em once said she thought the fairies must have marked Dorothy at her birth, because she had wandered into strange places and had always been protected by some unseen power. As for Uncle Henry, he thought his little niece merely a dreamer, as her dead mother had been, for he could not quite believe all the curious stories Dorothy told them of the Land of Oz, which she had several times visited. He did not think that she tried to deceive her uncle and aunt, but he imagined that she had dreamed all of those astonishing adventures, and that the dreams had been so real to her that she had come to believe them true.
(Baum,
The Emerald City of Oz, Chapter 2, Paragraph 5)
Then, in Chapter 5, Aunt Em and Uncle Henry arrive. And the whole issue of dream vs. reality is settled, once and for all.
Then, just over 28 years later, a whole committee of screenwriters tossed Baum's canon out the window with a script that came down decisively on the "dream" side, and released the movie the following year. And the worst part of it was that it created a "tail wagging the dog" situation, ultimately leading to Disney's
Return to Oz being essentially a conflation of
The Land of Oz and
Ozma of Oz, with the characters of Mombi and Languidere themselves conflated, the Land of Ev (where most of
Ozma of Oz takes place) squeezed completely out, the Magic Belt conflated with the Ruby Slippers of the MGM movie, and an added "Kansas" scene of a quack psychiatrist hooking Dorothy up to a primitive electroconvulsive therapy machine that was specifically designed to look like Tik-Tok, the latter two purely for the sake of making nods to the MGM movie.