A great dreamer is one who who is able to view through the thin wall between worlds between the Other World (Earth) and the World of Daventry in their sleep.
Background
Roberta Williams is the great dreamer and sorceress, and it was her dreams that allowed her to create the King's Quest games based on the history of world of Daventry. Daventry may be a place one can only reach through the dreams of the dreamer Roberta Williams, creator of the games themselves.[1]
Derek knew that a great dreamer in the other world created tales and fables from that which was Daventry's own reality, Daventry's own history. He also believed that there may also be another great dreamer now living within his world, who could dream of the fictions of the other universe, and was creating new realities and histories for his world based on them. He believed the worlds were drawing together, they had already been fairly close to begin with. That both worlds dream each other. The other world was creating its own visions of Derek's world, a different Daventry than his people inhabit (game realities). And now his people were dreaming of the version told in the Other World, and with that his world changed.
The Weaver of Dreams may be one of these great dreamers.
External 'dreamers' cannot change the realities of the worlds they dream about (though they maybe able to create new game realities). However, a great dreamer inside a world maybe able to add to the current histories of their world by influencing the present and future by dreaming to ideas outside the world (but not actually change the past of their own world), but if they do create 'new histories' of the past this creates other realities alternate to the original (the original history still remains as its own universe).[2]
Behind the scenes
Note when Derek speaks of 'histories' he is talking about his 'present' and current histories, and not histories deep into the past.
This is just one of Derek's theories. He admits there are other possible explanations his first thought is that KQ7 is a false story that never happened ("the tale is more fancy than fact...more fiction than history as he knows it...rumor or fabrication is all that is possible"), simply a fable. Alternatively he also admits that the story could be true, and all is possible and that the truth is hidden from him for only reasons the royal family knows.