Photopia/WMG

Alley's dream is her afterlife.
The Alley in the dream says that, when she arrived in this place, she was given domain over all the realms she dreamt of as a child. But all of those worlds are completely devoid of life, and slowly crumbling. They are dead because she is dead. What really seals it, though, is what dream Alley says to our Alley after telling her all of this: "By all means, go. Go. You'll be back soon enough. You see, I remember this conversation. From the other direction."
 * Alternatively, Alley did survive the car accident, but was permanently crippled or injured in a way that she could never fully recover from. This would be why the worlds didn't die right away or go completely extinct - it's because Alley didn't undergo an immediate physical death, but a slow spiritual death as she realized that she could never be the same vivacious, full-of-life Alley she was before. Which is, in many ways, actually more chilling than the theory above.