Hello MisterUnlikely!
It was the former. In Ananta-log, the Dwarves were the first born and were largely responsible for discovering and shepharding new beings towards civilization.
Upon meeting the Yantra-Log and realizing that they do not sleep so much as power down, discussions about dreams would have inevitably been had. Plus, so many cultures have phrases and metaphors that reference dreaming.
The Yantra-log would have quickly realized that there was a gap in their understanding and perception of the world.