Daydreamer in novel relates holding out nuts (5-5)
I believe the answer is:
lotus-eater
'daydreamer' is the definition.
(I know that lotus-eater is a type of daydreamer)
'novel relates holding out nuts' is the wordplay.
'novel' indicates anagramming the letters (letters in a new or novel order).
'holding' is an insertion indicator.
'nuts' indicates an anagram (nuts can mean crazy).
'relates' with letters rearranged gives 'lseater'.
'out' anagrammed gives 'otu'.
'lseater' going around 'otu' is 'LOTUS-EATER'.
'in' is the link.
(Other definitions for lotus-eater that I've seen before include "Indolent person" , "One indulging in pleasure and luxury, as described in Homer's Odyssey" , "One given to indulgence in pleasure and luxury" , "One living indolently - mythical person met by Odysseus in North Africa" .)