Oz the Great and Powerful

We are going to see the new Oz the Great and Powerful movie on Monday over Spring Break, but my family and I are a little confused about where the entire movie fits in to the well known story of The Wizard of Oz. Does anyone understand it? Its obviously a prequel to the story about Dorthy, but how can that entire movie have happened if The Wizard of Oz ends on the fact that it was all a dream? How could the protagonist in this new movie have ever existed if the entire story was a product of the imagination of Dorthy? Please comment if you know the answer.