A Dream Walker was a weapon created during the Great War. The wizards of that age took people known as dream casters from the city known as Caska in what became D'Hara. They died out at that time, however more recently the ability of a Dream Walker awoke in the form of Emperor Jagang.
Dream Walkers had the ability to slip in between the cracks of a person's mind and wedge themselves there. At first they could only appear in a person's dreams, but as the Dream Walker became more powerful, they were able to enter a person's mind at any time. If a Dream Walker wishes it, a person could be made to do anything against their will. No moment that a person has ever experienced would be out of bounds to a Dream Walker.
Most people were in fact protected against a Dream Walker as it takes a great effort for them to take over the mind of a person who is not gifted. However, gifted people were extremely vulnerable to a Dream Walker and this is partly why they were such a devastating weapon during the great war.
At first, there was no protection against a Dream Walker and the wizards of the New World searched desperately for some way to protect themselves. It wasn't until Alric Rahl created a bond to his people that a form of protection was available. The people's bond to the Lord Rahl protected them from Dream Walkers.
This bond carried on down the centuries and is the reason that the people fighting for the cause of Richard Rahl are immune to Emperor Jagang's powers as a Dream Walker.
A Dream Walker's eyes turn an opaque black once they have reached the height of their power.
It is revealed during the Chainfire Trilogy that Emperor Jagang was born as a result of the wizard Lothain's interference in the Temple of the Winds. Sent to fix the damage done to magic, Lothain, revealed later to be a traitor, instead ensured a Dream Walker would live again in order to ensure magic was completely eradicated. Barracus, a War Wizard and the First Wizard, later entered the temple to in turn ensure the birth of a War Wizard (Richard) to combat Jagang and the Imperial Order's quest to eradicate magic and enslave the world.