This song was in the musical, Joseph and the Technicolor Dreamcoat.

Thus, I would assume that there will be biblical context in it, or at least whatever was shown in the musical. In a summary, Joseph could interpret what dreams meant, and therefore became sort of a prophet, so I would say that the dream here is the symbolism of direction.

JOSEPH:

I close my eyes, drew back the curtain
To see for certain, what I thought I knew

It may seems illogical that the speaker drew back the curtain yet was closing his eyes. However, the closing of the eye could mean that the speaker is escaping from the reality world, or the world as the society sees. In another words, the world, seen from our eyes, is based on our human logic and earthly understandings. Thus, the speaker is trying to see the world at a different point of view, most probably from Heaven. The drawing back of curtain then represents the willingness to open up to new ideas and insights.

Far far away, someone was weeping
But the world was sleeping
Any dream will do

I have read some interpretation of this verse, and I find it accurate. The someone refers to Heaven, where whoever up there was sad to see the world in such chaos, yet the world is ignorant and oblivious to it, thus sleeping peacefully. So in order to give them some directions, the speaker hoped that Heaven could shine the path for them in the form of dreams, any type of dreams will do, any directions will do.

JOSEPH & CHILDREN:
I wore my coat (I wore my coat), with golden lining (Ahhh)
Bright colors shining (Ahhhh), wonderful and new

And in the east (and in the east), the dawn was breaking (Ahhh)
And the world was waking (Ahhhh)
Any dream will do

There is the symbolism of hope, as dawn is usually used to describe a new beginning, which in a way, hope. So perhaps, the speaker hoped to use this gifts, as a dream interpreter, to be sensitive to whatever Heaven got to say, to receive the directions from Heaven.

JOSEPH:
A crash of drums, a flash of light
My golden coat flew out of sight
The colors faded into darkness
I was left alone

However, the speaker had his talents as a dream interpreter wasted, unrecognised, and condemned, or ignored. Thus the colors faded into darkness describes his feeling of hope – crushed hope.

JOSEPH & CHILDREN
May I return (May I return) to the beginning (Ahhh)
The light is dimming (Ahhhh), and the dream is too
The world and I (The world and I), we are still waiting (Ahhh)
Still hesitating (Ahhhh)
Any dream will do

The speaker really hoped that he could be allowed to use his talents as a dream interpreter to give the world a sense of direction. There is also a second meaning to the dream in this stanza, which is a symbolism of hope. This time, however, is the hope to escape the “punishments”. Therefore, the light is dimming, on one hand, the world will have lesser directions to go, on the other hand, his fate or destiny is getting vaguer, and he started to doubt this talents, that he started to lose hope.