Suggests a leisurely or non-productive activity where one is lost in thoughts. On a lazy Sunday, he would often dream away the hours on his porch.
Pro Tip 2/3
Impractical Indulgence
Implies an impractical or unrealistic indulgence in thoughts rather than action. She dreamt away, imagining a life full of adventure, instead of actually pursuing it.
Pro Tip 3/3
Escapism
Can be used to describe a form of escapism from the mundane or stressful realities. After his stressful job, he would dream away to the sounds of soothing music.