The Collaborative International Dictionary of English v.0.48:

Daydream \Day"dream`\ (-dr[=e]m`), n.
   A vain fancy speculation; a reverie; a castle in the air;
   unfounded hope.
   [1913 Webster]

         Mrs. Lambert's little daydream was over. --Thackeray.
   [1913 Webster]

WordNet (r) 3.0 (2006):

daydream
    n 1: absentminded dreaming while awake [syn: reverie,
         revery, daydream, daydreaming, oneirism, air
         castle, castle in the air, castle in Spain]
    v 1: have a daydream; indulge in a fantasy [syn: dream,
         daydream, woolgather, stargaze]
    2: have dreamlike musings or fantasies while awake; "She looked
       out the window, daydreaming" [syn: daydream, moon]