I am quite sure they dream! I have seen my cats whiskers twitch, and their mouths moving like they are chewing, and sometimes, a low-pitch growl, while they are sleeping!
Maybe they are dreaming of their little toy mouse coming to life, and growing to be 10 feet tall, and is chasing them, or they can dream of being locked in a catnip factory all night!
who really knows? But it's cute to watch!
Enjoy every minute with her as a kitten, they grow incredibly quick!!