She found me roots of relish sweet,
And honey wild, and manna dew,
And sure in language strange she said--
"I love thee true."
VIII.
She took me to her elfin grot,
And there she wept, and sigh'd full sore,
And there I shut her wild wild eyes
With kisses four.
IX.
And there she lulled me asleep,
And there I dream'd--Ah! woe betide!
The latest dream I ever dream'd
On the cold hill's side.
X.
I saw pale kings, and princes too,
The repetition of ‘dream’ highlights the strange, unreal quality of the Knight’s time with the lady. 
 The reference to ‘latest’ could mean ‘most recent’, or ‘last’.  The Knight is dying, and this is the last dream he ever experienced. 
 In literature dreams are always significant, for example Jane Eyre’s foreboding about Rochester’s intentions leads to her nightmare. Harry Potter dreams whenever Voldemort possesses him. And of course there is  A Midsummer Night’s Dream  in which most of the action takes place in a world of unreality.