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Sony have a $2b investment in Epic, Epic make Unreal engine.
Dreams as a plugin for "other" engines means the other engine provides the features that Dreams does not have like networking, executables for multiple platforms, etc..
The Dreams sculpting & painting tools alone in Unreal seem to provide all the features people expected or wanted in Dreams itself. With the current features in Unreal, most, if not all of Dreams toolset, including logic & sound, could be a frontend to Unreal & by proxy the PlayStation SDK, so PlayStation Store.