I think in the movie version Dorothy was only dreaming about Oz, but if they go by the book, then I think it wasn’t just a dream. So, it depends how the writers decide to do it, but I think Oz is a real realm (or else where did the Wicked Witch and her monkey minions come from and where did Jefferson travel to in 2×5 to try and retrieve the silver slippers from for Rumple).
Oh Oz is a real land, for sure. But I think there is a giant metaphor being played out with the idea of dreams and nightmares that might tie into SwanFire. Emma looking for her dream life again after being woken up, Neal trapped in a nightmare (either realm or a metaphorical nightmare of being enslaved)
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"He was a lot of things to me" "The only conclusion was love"