Handmade Dream Catcher. As the legend goes, the Dream Catcher was used by Woodland Indians and was hung in the lodge near the bedroom window. Its use was to catch all dreams good or bad. The bad dreams would get caught up in the webbing and be held there until first morning light and then burned off. The good dreams were caught, knowing their way to the hole in the center, and would filter down into the feathers and be held there, to be dreamed another night.