For Elizabeth, dreams are where she can live out her biggest wish; being the princess of a world with all of her stuffed animals. There, she's respected and constantly showered in love and praise by her fluffy subjects.
But in reality, she only puts fear into their cotton-filled hearts. After being ripped apart and sown back together so many times, it's no wonder why the deformed plushies' angry souls won't rest until they return the favor.