Visible crew/equipment: There are multiple fragmented reflections of studio lights on Dorothy's bedroom window, as it rips off due to the twister. (00:16:20)
Continuity mistake: At the start of the "lions and tigers and bears, oh my" sequence, Dorothy, the Scarecrow and Tin Man are all standing separately, then the shot cuts and they're suddenly arm in arm. (00:48:45)
Continuity mistake: When the Munchkins come out onto the Yellow Brick Road, one of them comes out of a sewer hatch on the yellow bricks. It's located on the ground in front of the first small white cottage with the thatched roof, right behind Dorothy's house. Throughout this scene, the dark hatch is visible whenever we see that specific location, such as when the Wicked Witch of the West asks, "Who killed my sister? Who killed the Witch of the East? Was it you?" but as Dorothy begins to "follow the yellow brick road", there is an overhead shot followed by a front shot and the dark hatch has disappeared.
Continuity mistake: Just before the Wicked Witch leaves Munchkinland she says to Dorothy, "just try to stay out of my way" and her broomstick is facing upwards. In the next shot it's facing downwards. (00:30:35)
Continuity mistake: Glinda tells Dorothy, "Their magic must be very powerfulÂ…" and Dorothy has her left hand around Toto. In the next shot she's holding the flowers in front of her. (00:30:20)
Visible crew/equipment: Near the very beginning, when Dorothy is with Prof. Marvel, after she runs out of his trailer and the wind starts blowing, he follows her and goes towards his horse tied up outside. As he's walking towards the horse, you can see the shadow of a boom mic along his trailer. (00:14:55)
Revealing mistake: After the witch says "Hey scarecrow, wanna play ball" she throws a fireball at him. But you can see the ground catch on fire before the fireball hits the ground. (00:46:20)
Continuity mistake: There are two actresses playing Dorothy (and two dogs playing Toto) as she opens the door to Oz. The first is a stand-in wearing a dull colored dress in order to make it look black and white. After she opens the door and moves out of the way, Judy Garland is who we actually see walking through. Look at the different pleats on the two dresses. (00:19:25)
Continuity mistake: After the Tin man opens the door with his axe chopping its wood, Dorothy steps out and the door is totally fixed.
Character mistake: When Dorothy and the others enter the Haunted forest, the sign reads "Witches Castle One Mile." "Witches" is plural. To be grammatically correct, it should have said "Witch's Castle," if one witch, or "Witches' Castle" if more than one.
Revealing mistake: During some scenes, straw-stuffed Scarecrow's pant legs and his boots would sometimes have a gap that reveals the skin of Ray Bolger's leg. Two examples are, at Emerald City when Scarecrow places Lion's "cape" on him, and also when Dorothy and her friends are told the Wizard says to go away. (01:05:50 - 01:07:25)
Revealing mistake: When Toto reveals the Wizard by pulling the curtain aside, he doesn't use his mouth; the curtain is tied to the dog. Dorothy can even be seen later removing the rope.
Visible crew/equipment: Studio lights are reflected in the Wicked Witch's large crystal ball, as Dorothy sits down and cries beside it, just before she sees her Auntie in it. (01:15:10)
Visible crew/equipment: When Dorothy walks out of her house in Munchkinland, shadows cast by the trees can be seen on the painted hills right behind them. (00:20:20)
Continuity mistake: Back in Kansas, Dorothy holds Toto and her pigtails swap from being behind to in front.
Revealing mistake: In the Haunted Forest, when the Tin Man is lifted up then lands back on the ground, at Tin Man's lower back you can see his white T-shirt tucked into his pants. (01:14:10)
Continuity mistake: Inside the Emerald City, when they are at the palace entrance, the guard's mustache is turned up in the first shot, and is turned down in his next shot. (01:04:45)
Continuity mistake: When Toto escapes, he runs up to the three putting the Scarecrow back together and the Tin Man has nothing in his left hand. In the next shot the ax appears in his hand. (01:19:40)
Continuity mistake: You see a Flying Monkey with Toto before he gets picked up. (01:15:30)
Continuity mistake: At first the Tin Man starts chopping the top part of the Witch's door with his ax and two shots later he's chopping about two feet lower, near the handle. If you look closely when he eventually gets the door open, the top part has not been touched. (01:23:40)
Answer: In the film it's left ambiguous. At the end it's strongly implied that she was dreaming. The characters she meets all look like people she actually knows. In the original book, she actually went to Oz.