This makes the film more interesting, and I think Laura-Anne's entire worldview is summed up when she says on Halloween, "Laura Anne was too old for the children's party, and too young for the teens, she was stranded somewhere in between." (Or something to that nature.)
Laura-Anne lives in a place where there is no escape from the harshness of that life, but it is whenever she is outside playing in the surf or on the tree that you remember that she is still mostly a child, and that is why she dreams.
I believe that her fairy-tale fantasies are created because if she can't make her life seem like a fairy tale, even in its simplicity, the reality of her situation becomes very clear. However, she makes the story fit into her life, so that it is possible for her fairy tale dream of finding love to become a reality in the small and poor town that she lives in. The beauty of the movie is that her simple life can be transformed into a fairy tale with a few rhyming words.