Beginner's guide to Dreams and Nightmares

What will I be fighting?
Dreams and nightmares features the following enemies, that are mostly copies of their Tier 2 versions:
+Wolvers = not so bad, cannot teleport
+Toxigels = spike attack = extremely bad, beware this enemy
+Thwackers = watch for their spin attack; these get stuck to walls at low health
+Lumbers = extra large and tankier than usual
+Dust zombies = no breath attack
The first 2 levels are running levels, wherein you want to miss the boxes (or get them if you feel the urge, they contain nothing but crowns ever, no rarities), but the last level is a relatively difficult arena.This last arena area has waves that alternate between being "solved" by shadow and piercing like so...
Wave 1 = weak to shadow
Wave 2 = weak to piercing
Wave 3 = weak to shadow
Wave 4 = weak to piercing
etc.
Since it's an arena, bombs are a great idea here, which leads us to the EZ-Mode loadout:
Chaos/Black kat = there's not much status beside poison, and no one damage type you can really prepare for.
Dark Retribution = Shadow bomb of choice
Dark Briar Barrage = Piercing bomb of choice
(Optionally) Some kind of normal gun/sword to kill stragglers with
ALL THE HEALTH PERKS + TRINKETS = NO VITAPODS DROP HERE
Shield = whatever you have, but preferably normal/piercing/poison = yellow tortodrone shield or ironmight or so..
Other bombs to consider are ash of agni (which melts most everything here, except for the gremlins) and the various shard bombs, since the shards can provide a decent way of damaging things as a support. Nitronome and Irontech also work for it.
The more advanced loadout that you might have is-
Chaos/Black Kat (again)
Vortex-of-choice
Iron Slug or brandishes or whatever
This "advanced" loadout is much higher risk, much higher reward. It outdamages all of the above options, but has a tendency to get you hit. To counter this- USE SERAPHYNX'S HEART ATTACK CONSTANTLY
Solanacea has a good image of this strategy here
But I didn't craft any bombs! Or Seraphynx!
First of all you should probably consider buying Operation Crimson Hammer, either with cash or with ce you get from Vanaduke runs the arcade, wherever else.... nor is Dark Briar Barrage particularly hard to obtain, and you can always get a default+boring seraphynx for some energy, and then get heart attack to it's max. It's not so bad of an idea when preparing for the mission.
Second of all you can piggyback off of someone else using your various non-bombs that you crafted. You probably have...
Barn-dishes- Watch out for standing still while attacking as that can get you hit. Mostly just finish things off for the bomber.
Acheron- Same deal as above, but shadow... which means it counters all but zombies. Congrats.
Blitz Noodle- Don't charge unless you know you won't get hit... just use regular shots for less damage, then move on quickly.
Grim Repeater- Same deal as blitz... but it completes them. You can do the entire thing, albeit slowly, with just these 2.
etcetera, etcetera
These work just fine, but are going to be quite a bit slower and harder to use than the aforementioned bomb loadouts.
No one ever wants to join the mission.....
Well go find some friends! Join the arcade discord server- https://forums.spiralknights.com/en/node/113634
Then go and find someone experienced to run DaN with. After a few runs of this you should be able to get the hang of it.
Remember that practice makes perfect, and that learning is a huge part of the game.
For more info, and a slightly more advanced guide, see- https://forums.spiralknights.com/en/node/116107

I just made a Chaos cloak yesterday and I have to say--the charge time reduction and damage bonus help immensely. Is the chaos/BK set considered the best for most things?

Is the chaos/BK set considered the best for most things?
Yes, if you can handle the status penalties. I have an armor guide that explores all of this in greater detail.
In some asymptotic sense, Black Kat is better than Chaos. Chaos's CTR advantage can be replicated through unique variants, but Black Kat's MSI+damage advantage can't be replicated elsewhere. (For example, Mercurial Demo gives MSI but not as much damage and not blanket damage.) Black Kat is the only armor that lets you achieve
* damage+6 on all weapons against all enemies
* CTR+6 on all weapons against all enemies (using UVs)
* MSI+6 (using a perk and two trinkets)
* ASI+6 on swords and guns (using UVs) and ASI+3 on bombs (using Swiftstrike Buckler).
Of course, obtaining all of those UVs takes a lot of effort or time, and meanwhile Chaos can be very useful.

I too have a guide for choosing armor that I like to spread around- https://forums.spiralknights.com/en/node/116352
The gist of it is that unless there is heavy status that you don't have UVs against (compound 42 and ghosts in the machine), chaos or black kat is your best bet. If there are heavy statuses, then you'll want to have status resistant armor sets for it. These can be crafted in your spare time after you have most of the weapons done, or whenever you feel ready as a vanguard+.
In the case of dreams N nightmares, chaos/black kat rule due to the level's lack of anything but poison on a single enemy- arguably the most mild status effect though not all agree and it can still be dangerous.

Why can't I find my Acheron/Arcana loadout here? I always use it for D&N, pretty decent and completes the final arena pretty fast too, if you don't have max CTR on bombs this can be a substitute for D&N. Especially if you can single-switch Arcana. The only challenge can be the final arena without Dark Briar Barrage, but you can just pick on monsters one by one. I used to be a bomber and I have to say, Dark Retribution/Dark Briar Barrage loadout is the fastest way to go, but if you can't afford OCH or can't handle the status penalties of chaos set so you won't bother to craft it, this can serve you well as an all-round loadout. Having Maskraith pet is pretty good too, the shadow cloak helps me much in repositioning.

You can get by with less than stellar loadouts like the acheron/arcana, but it won't be very fast or fun and because it drags on there's a higher chance you'll have to spark. This is why I suggest joining the discord and bringing a friend if you're limited on gear.

The original post doesn't exactly address this question: Is Dreams and Nightmares easier solo or in a party? (And does the answer depend on whether the players are expert or novice?)
I usually solo the thing. The final arena fight is easy, because you can just circle counterclockwise. Except for the void lichens, the AIs can't really lock onto you. So solo is not hard. And most of the fights in the first two levels are optional, but the forced fights might be easier with a party.

When I used to be a bomber I usually soloed the final arena in like 10 mins max (my loadout was Mad Bomber set + Dark Retribution/Dark Briar Barrage/Celestial Vortex/Ash of Agni) but in a party it took a little more and I used to de more, it’s mainly because teammates distract the monsters which means you can’t control all of them at once and the swarm turrets aimed at them instead of me so I didn’t know where the bullet was going as well, it was easier for me to carry a party of 3 dead knights rather than playing with another knight. When not bombing, however, it’s good to have a party since you can split roles and finish the arena much faster with less injuries especially when gunning.
actually really good advice. (you misspelled the title tho)