
Continuity mistake: When Dorothy slaps Lion on the nose for chasing Toto and shouts, "Shame on you!" in the wide shot, we see Dorothy's right arm with no mark on her skin. It then cuts to the medium shots, and there's an inexplicable long, thin blue mark (it's not a loose thread) on Dorothy's arm near her elbow, while she's holding Toto. This blue mark vanishes in the wide shot when she puts Toto down, and Lion begins to sing. (00:50:25)
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.