Visible crew/equipment: As the Munchkins sing "Ding Dong The Witch is Dead" " the shadow of the cameraman and someone else can be seen on the nest of the green Munchkin eggs as they hatch into little pink Munchlets. (00:26:55)
Continuity mistake: When Glinda says, "Let the joyous news be spread" the bridge and pond are behind her. In the next shot she's turned around almost facing the pond. (00:23:40)
Continuity mistake: In the poppy field Dorothy falls down with the basket at her side. No one touches it but in the close-up it's by her head. (00:55:45)
Revealing mistake: During some scenes, straw-stuffed Scarecrow's pant legs and his boots would sometimes have a gap that reveals the skin of Ray Bolger's leg. Two examples are, at Emerald City when Scarecrow places Lion's "cape" on him, and also when Dorothy and her friends are told the Wizard says to go away. (01:05:50 - 01:07:25)
Visible crew/equipment: While Dorothy and the other characters are cornered in the Wicked Witch's castle, when Dorothy grabs the bucket of water and tosses it at Scarecrow's arm, the water hits the Witch. In the closeup of the Witch's face, you can see a crew member's hand (a long sleeve can be seen at the wrist) in the upper left side of the shot. (01:26:20)
Continuity mistake: While with Professor Marvel, when Toto eats the sausage and Dorothy scolds him, she places her left arm on the basket. A frame later her arm is resting by her lap.
Visible crew/equipment: When Dorothy first walks in the pigsty the shadow of the boom mic can be seen moving on the bottom left of the screen. (00:03:50)
Continuity mistake: The Tin Man starts chopping the Witch's door and it's not the same one we just saw three shots before. The wood is a different color and the dark metal brace has been polished in the close-up. (01:23:40)
Visible crew/equipment: The seams in the floorboard under the Haunted Forest set can be seen several times under the leaves. The best is in the close-ups of Toto. (01:15:30 - 01:19:35)
Continuity mistake: The rope around the Scarecrow's neck is tied differently throughout the scene after he meets Dorothy. The rag around his hat is rearranged also. (00:34:50 - 00:36:20)
Continuity mistake: When the Tin Man, Scarecrow, Cowardly Lion and Dorothy are cornered in the witch's castle, the scarecrow grabs the Tin Man's axe and chops a rope, releasing the chandelier, which falls on the guards. In the next shot, however, as the witch is shrieking "seize them", the guards give chase with only 1 or 2 laying on the floor. (01:24:55)
Continuity mistake: After the Witch throws a fireball at the Scarecrow in the woods and disappears, Dorothy is holding Toto. But when it cuts to a closeup of her, it looks like her shoulders are extended. When it cuts back to the wide shot, she indeed has her arms around the Scarecrow and Tin Man, even though she never put Toto down. (00:46:55)
Continuity mistake: As the four go through the green doors to see the Wizard the hallway triples in length between shots. (01:08:40)
Continuity mistake: After Dorothy falls into the pig sty Zeke holds his left hand over the right side of his chest. In the next shot his hand is over the left side of his chest. (00:04:20)
Visible crew/equipment: As Dorothy and the Scarecrow dance off and sing, "We're off to see the Wizard" moving spot lights and equipment shadows can be seen on the grass on the right of the Yellow Brick Road. (00:39:00)
Audio problem: Just before Aunt Em and the others go into the storm cellar, Em calls for Dorothy and tells Henry she can't find her. Em's mouth never matches any of the words she is saying. (00:16:00)
Visible crew/equipment: As the door keeper tells them he will get them to the Wizard the camera shadow can be seen moving across the green door. (01:08:15)
Revealing mistake: As Dorothy skips off on her journey at the very end of the song "Follow the Yellow Brick Road", the shot cuts just in time to prevent her hitting the painted backdrop. The join between the ground and the backdrop is visible.
Continuity mistake: When the Wizard says, "Pay no attention to that man behind the curtain" he pulls the curtain closed and Toto's not there. In the next shot Toto's tied to the curtain again. (01:28:35)
Revealing mistake: In the scene when the Wicked Witch of the West bends down to retrieve the ruby shoes from the feet of her sister sticking out underneath Dorothy's house, there is one quick shot in the middle of the scene that shows her in front of a screen with a picture (film) of the house on it. Maybe that shot was filmed after the original set was unavailable? That would seem to be the only possible and reasonable explanation why such a shot would be necessary. (00:29:55)
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.