Fantasist in daughter, back to embrace me (7)
I believe the answer is:
dreamer
'fantasist' is the definition.
(I've seen this before)
'daughter back to embrace me' is the wordplay.
'daughter' becomes 'd'.
'back' becomes 'rear' ('rear' can be a synonym of 'back'**).
'to embrace' indicates putting letters inside.
'rear' enclosing 'me' is 'reamer'.
'd'+'reamer'='DREAMER'
'in' acts as a link.
(Other definitions for dreamer that I've seen before include "He has visions" , ""You may say I'm a __" (John Lennon)" , "Gerontius" , "stargazer" , "Idealist - visionary" .)