na-adjective
dreamlike; dreamy; phantasmagorical
Describes something that feels unreal, surreal, or like a dream. Often used for atmospheres, scenes, or experiences that are beautiful and otherworldly.
その映画の映像は夢幻的で、現実とは思えなかった。
The imagery in that movie was dreamlike and didn't seem real.
霧に包まれた森は夢幻的な雰囲
The mist-shrouded forest had a dreamy atmosphere.
夢のような is a more colloquial and direct way to say 'like a dream', whereas 夢幻的 is a more literary and compact adjectival noun.
Compound of 夢幻 (mugen, 'dreams and phantasms') + 的 (-teki, '-like'). The exact historical derivation of 夢幻 is uncertain, but the combination is used to convey a dreamlike or surreal quality.