I'd say this level is, in general, fundamentally sound. The visuals are well done, the color balance works, the clouds are well made and aren't disruptive even if they're prominently veering across the screen. The music choice fits well. I like the glowing crystals and the "additional brightness" effect when the player walks past them. Some people would probably say it almost looks a bit too busy but I'd say it's just on the edge of not being too busy.
The usage of the main gameplay motif, 'Dream Blocks', doesn't play unfair. The enemy palette is strict and I like that. The small-scale gameplay seems confusing at first, but there are a plenty of arrow signs and coins, so that's well done, too. And even if you run into a dead end, the level doesn't waste your time. The length also seems right - not too long, not too short either. There aren't any parts that feel unfair, nor are there any jarring difficulty spikes. Frequent checkpoints make the level quite easy, but that's a matter of personal taste. The section after the locked door, where you pass though the same screen from the differing angles is something I dig. What secrets I found on the side (Star Coins), were nicely hidden.
The visuals are good, so the main critisism I have would be on the gameplay side. Even though the level has some setups, and there are Dream Blocks of varying length, the mid-game of the level feels a bit like a blur. The beginning introduces the zones well and I really liked how towards the end, there were queues of Spike Tops on Dream Blocks which you had to avoid in differing ways. But it's between these sections when the level doesn't do much to shake things up. What I'm trying to say, is that more "bold" enemy/dreamblock/both setups should be looked into, that all play differently - so that it provides a colorful palette of different-feeling challenges and the gameplay doesn't get "blurry". Even though I like the post-locked-door section as I mentioned earlier, it's in the enemy setups where its weaker. Admittedly, I didn't go for any big secrets save for the hidden Peach, so there might be more to it, too.
Also, the Foos don't do much in terms of providing gameplay challenges. I think they are designed to obscure your vision but I didn't see any Foos that made any obstacle harder.
There's also that Mario will get sent back if even slightly clips into a block after exiting a Dream Zone, but you made sure you respawn on the same screen anyway, so it ain't too bad. But, I still feel like it happens too often.
Also, I've spoilered images below which show pesky spikes I hit my head into multiple times, and you wouldn't think there was a threat there.
when backtracking for the key: show
In short, good visuals, the design style plays 'safe', so there is minimal egregious design, but makes mid-level is a more bland than it could be. I'd give it a solid score.