Dorothy: There's no place like home.
Wicked Witch: Ohhh... You cursed brat! Look what you've DONE! I'm melting! Melting! Oh... What a world, what a world! Who would have thought a good little girl like you could destroy my beautiful wickedness?!
Lion: [crying.] Look at the circles under my eyes, I haven't slept in weeks.
Tin Man: Well, why don't you count sheep?
Lion: Oh it's no use, I'm afraid of them.
Auntie Em: Elmira Gulch, just because you own half the county doesn't mean you have the power to run the rest of us. For twenty-three years, I've been dying to tell you what I thought of you, and now... well, being a Christian woman, I can't say it!
Scarecrow: The sum of the square roots of any two sides of an isosceles triangle is equal to the square root of the remaining side. I've got a brain!
Wicked Witch: I'll get you my pretty, and your little dog too!
Dorothy: Follow the yellow brick road.
Dorothy: Toto, I have a feeling we're not in Kansas anymore.
Wizard of Oz: Pay no attention to that man behind the curtain.
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.