Mind Hacks excerpts an article on dream development:
Preschoolers’ dreams are often static and plain, such as seeing an animal or thinking about eating. There are no characters that move, no social interactions, little feeling, and they do not include the dreamer as an active character...Preschoolers do not report fear in dreams, and there are few aggressions, misfortunes and negative emotions. Children who have night terrors, in which they awaken early during the night from SWS [slow-wave sleep] and display intense fear and agitation, are probably terrorized by disorientation owing to incomplete awakening rather than by a dream. Thus, although children of age 25 years can see and speak of everyday people, objects and events, they apparently cannot dream of them.