Well this song was written for the "Almost Alice" cd for Tim Burton's Alice in Wonderland, and I see this song as being about Alice and the Mad Hatter--after all, opposites acttract. : D
"And the truth that makes us laugh will make you cry." Of course I'm not certain, but this line reminds me of the part in the movie when Alice is upset that she's the only one who can kill the Jabberwocky, and she cries.
Wonderland is--of course--Real and true to all the inhabitants. They laugh and have a good time in their world.
Wonderland is a dream at first to Alice. It's truth makes her cry.
Maybe?