Continuity mistake: The yellow brick road is made out of painted bricks. As they enter Oz it changes into shiny linoleum with grey grout marks painted on it. (00:59:25)
Revealing mistake: Soon after Dorothy, the Tin Man and the Scarecrow meet the Lion for the first time, they dance along the Yellow Brick Road, singing. As they disappear at the back of the set, their shadows can be seen on the backdrop, equally covering the trees and everything in between. DVD showing. (00:53:10)
Continuity mistake: When Dorothy is talking to the Scarecrow for the first time, the Scarecrow moves further down his pole between close up shots. (00:34:35)
Continuity mistake: In the section just after the Tin Man has been oiled, he drops his axe and starts dancing on the road. After the Witch throws the fire at the Scarecrow, the three of them start down the road to Oz, he has mysteriously picked up his axe. (00:42:45 - 00:47:30)
Revealing mistake: In the scene where Dorothy, Tin man, Lion and Scarecrow are in the haunted forest and are discussing whether or not to believe in spooks, Tin Man is lifted up into the air and then comes crashing to the ground. You can see his pants wrinkle up as he's trying to get up. Since when does tin wrinkle like that? (01:14:00)
Audio problem: After the Wicked Witch of the West is liquidated, the soldiers hail Dorothy. After Dorothy asks for the broom, they are heard hailing her again, but none of their mouths move. As the scene fades into the next one, the soldiers' mouths can be seen beginning to move to say the line. (01:27:20)
Continuity mistake: The characters change places from one shot to another as the Wizard gives the Tin Man his heart, etc.
Continuity mistake: The flower pot crown that falls from the Cowardly Lion's head goes from being behind the gang to by the right of them, with no-one touching it. (01:04:38 - 01:05:50)
Continuity mistake: In one of the most endearing scenes from one of the greatest movies of all times, nobody noticed that as Dorothy sings "Over the Rainbow" the haystack she's standing next to just materializes between shots. Later it disappears long before the twister reaches the house. If you watch the movie you'll see the exact spot where the haystack should be seen as Aunt Em gives Dorothy a cruller and says to her, "and find yourself a place where you won't get into any trouble". (00:07:25)
Continuity mistake: As the Tin Man chops open the Witch's door only one piece of wood has fallen off of it. In the next shot when Dorothy comes through there's much more rubble on the floor (in front of and behind the door) than there should be. (01:24:00)
Audio problem: The very last line of the scarecrows song "Life would be a ding-a-derry if I only had a brain" does not match with the scarecrow's mouth movements, probably because he's too busy concentrating on his dancing. (00:35:55)
Visible crew/equipment: There are multiple fragmented reflections of studio lights on Dorothy's bedroom window, as it rips off due to the twister. (00:16:20)
Continuity mistake: At the start of the "lions and tigers and bears, oh my" sequence, Dorothy, the Scarecrow and Tin Man are all standing separately, then the shot cuts and they're suddenly arm in arm. (00:48:45)
Visible crew/equipment: As they enter the poppy field their shadows can be seen against the painted wall as they walk in front of a stage light just before and after they come into view. (00:54:20)
Visible crew/equipment: In the close-up when Dorothy sings, "With the thoughts you'd been thinking you could be another Lincoln, if you only had a brain" look closely and you can see the shadow of the camera man on the Scarecrow's arm. (00:36:55)
Continuity mistake: When the Munchkins start coming out to see Dorothy, one Munchkin comes out of a manhole. But in other wide shots, and when Dorothy leaves to go to Oz, the manhole has totally disappeared. (00:22:25)
Continuity mistake: As Dorothy and the Scarecrow exchange, "How do you dos" the straw coming out of the left side of his shirt triples between shots. (00:35:05)
Continuity mistake: The Tin Man looks at the rope that holds up the chandelier and it's covering the knot. The next time we see it as he takes the axe to it, the rope is on the left of the knot. (01:24:40)
Continuity mistake: As Zeke feeds the pigs we see his hankie sticking straight up out of his back pocket. He doesn't touch it but later before he pulls it out after rescuing Dorothy, it's hanging downward and much more is showing. (00:04:00)
Continuity mistake: As Dorothy stands in front of the Wicked Witch the ruby slippers are protruding over the step. In the next shot they are several inches back from the step. (01:16:50)
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.