Fantasising made dame grin wildly (8)
I believe the answer is:
dreaming
'fantasising' is the definition.
(I've seen this before)
'dame grin wildly' is the wordplay.
'wildly' indicates an anagram.
'dame'+'grin'='damegrin'
'damegrin' anagrammed gives 'DREAMING'.
'made' is the link.
(Other definitions for dreaming that I've seen before include "form of idealism?" , "Having fantasies in mid-range" , "In reverie" , "Having fantasies about Niger Dam" , "Fantasising" .)