Live in a bit of a dream (3)
I believe the answer is:
are
This clue could be a double definition.
'live' is the first definition.
('they live' means 'they are')
'bit of a dream' is the second definition.
The definition and answer can be both quantities as well as being singular nouns.
Perhaps they are linked in a way I don't understand?
'in a' is the link.
Can you help me to learn more?
(Other definitions for are that I've seen before include "Exist; square measure" , "Unit of land measure equal to 100 square metres" , "live" , "(We/they/you) exist" , "is for more than one" .)