Dreams are as open to humor as they are to any other part of your personality. Sarcasm is a particularly interesting facet of humor that emphasizes the shortcomings of a person. Consequently, whether you initiate or are the butt of the sarcasm shows something about your place in the dream.
Sometimes, the entire dream falls into this category. The dream is almost a cruel joke played upon you. This may be a dream that sheds light on your relationships or potential in the world. This dream may occur when you are in a situation that could potentially place you in circumstances that are way over your head.
Dream sarcasm often has metaphorical meaning related to waking events and vice-versa. For example, a phrase used by others to torment you may become a central object in the dream that you either worship or loathe.