An extradimensional dreaming giant, it could manifest creatures from its dreams and send them into other dimensions to appear before inhabitants of those dimensions, targetting powerful beings. After its dream creatures had lured its victims to its own dimension, the City read its victim's mind, then created illusions appropriate to the victim tho attack them until they surrendered or were defeated.
The City could do all these things while it was still asleep. If a victim proved particularly resistant, it woke up to defeat its victim by itself with a powerful psychic blast from its eyes. It devoured its victims after they were defeated and turned them into part of its dreams.
After millennia of sleep, the City sent out an assassin from its home dimension into Dr. Strange's Sanctum Sanctorum. It was only a dream, but Dr. Strange fought and defeated it nonetheless. With a spell of inverse he followed the reappearing assassin to the City of Dreams. There, Dr. Strange heard the hum of the sleeping creature, but he didn't know what it was.
He saw buildings whose walls were warm and felt like skin, but he didn't know why. Dr. Strange thought that this was his rise to godhood and nearly surrendered to the darkness, but with a spell of light he broke the illusion. The light revealed his old nemesis Nightmare coming for him, but Dr. Strange saw through the illusion this time and defeated it, only to see that the illusion turned into Eternity. Eternity craved for Dr. Strange's destruction because he had become too powerful.
Dr. Strange destroyed this new illusion as well and finally saw a pattern. The hum ended and telepathically the City began to speak to Dr. Strange. It was surprised that Dr. Strange saw through the illusions so fast, and revealed to Dr. Strange that it sent out its assassins in all the dreams of powerful beings to lure them to him. Dr. Strange's resistance aroused the creature's interest and now the creature wanted to awake to devour the Sorcerer Supreme.
Dr. Strange created a doppelganger to oppose the creature and cloaked himself. The creature was attacked by the doppelganger and it was impressed by the strong blow which reminded it of the power of Blue Erik of Illeryia. The City's eyes opened and it finally saw Dr. Strange (only the doppelganger). With a blast from its eyes the doppelganger was no more. When the creature couldn't smell anything it thought that everything that just happened was merely a dream and returned to its sleep. Dr. Strange silently left for Earth and sealed the gateway between his and the City's dreams so that it would never find him again.