Imagination has nothing to do with dreams. We can only dream distorted versions of things we have experienced.

Also, when they receive a sensory perception, they have very clear knowledge of what might be causing it. Prey, or an intruder. A human might imagine a monster, a ghost, a mad axeman or a satyr. A cat or a dog knows that it is either something they can eat, somethng they have to fight, or nothing to do with them. Those are all the options they have, and they are programmed into their DNA.