
Revealing mistake: When the guard tells Dorothy that she may not see the Wizard, Dorothy starts crying and tells a sob story about Auntie Em. Then, it shows the guard crying, but the tears aren't coming from his eyes. They're coming from above his eyebrows. (01:08:00)
Continuity mistake: When the Tin Man tells Dorothy that he was chopping that tree, she starts to turn her head to look at the tree. But then in the jump cut closer, suddenly she's looking back at the Tin Man.
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.