Although many writers had had periods of significant depression, mania, or hypomania, they were consistently appealing, entertaining, and interesting people. They had led interesting lives, and they enjoyed telling me about them as much as I enjoyed hearing about them. Mood disorders tend to be episodic, characterized by relatively brief periods of low or high mood lasting weeks to months, interspersed with long periods of normal mood (known as euthymia to us psychiatrists). All the writers were euthymic at the time that I interviewed them, and so they could look back on their periods of depression or mania with considerable detachment. They were also able to describe how abnormalities in mood state affected their creativity. Consistently, they indicated that they were unable to be creative when either depressed or manic.

So yes, daydreams are related to well being.

And creativity comes from the same place that can cause people mental health issues.