Everyone's miserable (or drunk), and Old Major announces that what we really need is a revolution. This is about as clear-cut as anticipation gets. Even we're looking forward to the rebellion.
The Dream Stage
The animals rebel, and it's successful! Hooray! All their dreams will come true!
No, literally the animals proceed to have dreams. These dreams don't sound terribly different than Old Major's dreams, either. And with all these dreams flying around, we're thinking it's the "dream stage."
Things start to go downhill, what with Napoleon's public massacres and all. Problems are both internal (the executions, oppression, starvation) and external (invasions and attack).
We're all extremely frustrated right now. What's interesting is that, the animals aren't quite smart enough to follow this tragedy trajectory themselves—they're confused but not exactly frustrated. It's we the readers who have to go through the frustration stage (and the stages to follow), feeling for the animals what they aren't quite capable of feeling themselves.
Using our own emotional reaction to gauge the plot's movement? Ugh, so human.
The pigs are starving and oppressing all the animals, and then Boxer gets sent to the glue factor, which sounds like the punch line of a joke. But it's not. Things have gone from bad to way, way worse.
At the end of book, we realize that the pigs are even more oppressive and corrupt than Jones—and it seems like the animals might finally realize it too. What's destroyed? Dreams. Visions. The ideas of Animalism. Any semblance of justice or equality. Our spirits. Take your pick—it's been destroyed.