It's a nightmare raggamuffin. Which translates to 'It's a creature who composes itself of stolen nightmare fragments, and subsists on fear'. Like a... Uh.. Hmm.
Well, the idea is that it drifts from dream to nightmare, stealing any particularly functional or appealing feature of the imagined creatures in your dreams, and incorporates that into its form. It doesn't have a 'natural' form, nothing to revert to. It just is, and has been, you see? Not that it's ancient or all-knowing, just that it sprang into existence complete with enough memory to fill the empty buffer, and a random form made of passing dreambits.
Well, I thought it was clever.