Cyberpunk, dieselpunk, steampunk... dreampunk? Unlike its better established siblings, this rather nebulous fantasy subgenre is not rooted in technology or a reimagining of a different era. Quite simply, it is rooted in dreams.
Common elements of the genre include "dream logic" (which may not be entirely logical), simple fairy-tale-like surface plots with deeper levels of hidden significance, old-fashioned gadgetry, occult symbolism, mythological references or retellings, and Jungian psychology. A typical dreampunk story (if such a thing can be said to exist) may well feature clockwork, airships, dystopian governments, nefarious corporations, robots, ghosts, magicians, fairies, and the like, but these elements are all subservient to the central premise that consciousness is king. That is to say, the subjective experience of our characters is what concerns us most, even if that experience has very little to do with objective reality.
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The first dreampunk story that comes to mind—perhaps the defining work of the genre—is Alice's Adventures in Wonderland, by Lewis Carroll. This book was of course published long before the label "dreampunk" was devised, but its retroactive categorization as a dreampunk story fits better than any other genre I've heard. The Alice stories have a good deal in common with steampunk, but there is no focus on technology, and their main action takes place within a dream.
In contrast to Wonderland and the Looking-Glass World (two distinct places, despite what Tim Burton would have you believe), there is no indication in L. Frank Baum's Oz books that Oz is anything other than a real place, albeit magical and very well hidden. That said, the classic film adaptation did present Oz as a sort of dream, populated as it was with fantastic counterparts to Dorothy's real-world acquaintances. In short, Baum's novel The Wonderful Wizard of Oz was probably not a work of dreampunk fantasy, but MGM's film The Wizard of Oz most definitely was.
This is not to say that every dreampunk story must take place within the framework of a literal dream. A dream could be the waking life of a character who is mentally ill, or perhaps just extremely imaginative. Or it could be the result of a hallucinogenic drug, or divine revelation. For a story to be called "dreampunk," some form of dreaming should play an important role, perhaps affecting consensus reality or even in some way supplanting it. In my literary experience, the writer that best exemplifies this aesthetic is undoubtedly Philip K. Dick.
