Factual error: When Glen and Nancy are talking on the bridge, you can see huge palm trees in the background. Though this was filmed in California (hence visible palm trees at the cemetery), the fictional Springwood is supposed to be in Ohio - they show the location of Springwood on a map at the start of 'Freddy's Dead, the Final Nightmare', and there's no other conflicting in-universe location given within the series. So it's established as Ohio, but there are no palm trees in Ohio. Other California "hints" add to the mistake, such as CA license plates, etc. (00:01:00 - 00:43:22)
Answer: 1. Freddy is the ghost of a child killer, he is very difficult to be rid of. He did not die at the end of this film. 2. It is possible to bring items and even people in and out of the dream world. Although it is never explained in detail how. 3. It was a dream, but as seen in the film, that's not a good thing.
MasterOfAll