The dream sequence was symbolic of Tony's situation.
His identity being lost at the time, him being stuck, and stranded in a town of which he can't get out. It's symbolic of the coma he's stuck in.
I'm not sure about the dream segments. My family doesn't like them, and they bitch because they're "boring". Then again, when it comes to television, my family is very two-deminsonal. I like them every so often as a change of pace. Mainly interesting, and some times humorous. I stand indifferent with dream episodes.