Deliberate mistake: Before Dorothy is sent to Kansas there's a close-up of her shoes. All of the group's feet, Glinda's dress, and the rest of the elements around are gone and replaced by a black background. Despite being a deliberate directorial decision to give the shoes a more dramatic focus, it is really awkward to see everything disappear, nevertheless.
Sacha
Answer: In the film it's left ambiguous. At the end it's strongly implied that she was dreaming. The characters she meets all look like people she actually knows. In the original book, she actually went to Oz.