The central threat in ‘Last Christmas’ is the Dream Crab. Much of what we learn about them can’t be taken for granted as the majority of the information is provided in what we later learn is a dream state.
This is balanced by the fact that the Doctor is aware of the legends of the Dream Crabs, meaning that if there was anything obviously false about the information revealed here he should realise that it was a dream.
The Dream Crabs appear to be a parasitic race, using their long finger-like appendages to clamp on to the heads of their victims. Once attached they drill into the victims skull and liquidise their brain, slurping it up through a feeding tube.
To keep its victims docile it generates a telepathic field, altering perception. This puts people into a happy dream, from which they don’t want to awaken. The Doctor implies that it is the host that creates the dream, congratulating Clara on the detail of her home and the dialogue given to Danny.
This dream state and the level of input the host has may be influenced by how deep the victim is into the dream. All the current victims of the Dream Crabs are first placed within the polar base scenario, where they imagine that they are scientists.
Here the Dream Crabs have a presence, members of the supposed polar team already taken over by the aliens are in fact a representation of the hosts mind already taken over. This top level is where the victims have the best chance of fighting the telepathic field, as their own mind provides them with warnings and provides support (in this case in the form of Santa Claus).
In this environment they can avoid the Dream Crabs and if they can escape they can wake up naturally. This is presumably why they are placed in an isolated location. It is only because they get a lift in Santa’s sleigh that they make it out alive.
If they are taken over by the Dream Crabs in the first level they are placed into a deeper level of dream. This second layer appears identical to the first and would appear to be used to disorient the victims.
We learn that no one escaped the attack in the infirmary. Presumably, if the Doctor had not been present, even if the group had managed to wake themselves up once they would believe the polar base was the ‘real world’ and not fight anymore, eventually dying when their brain was liquidised.
In the second layer a Dream Crab can propel a victim even deeper where they are isolated. Clara creates a scenario in which Danny is still alive that she doesn’t want to leave, despite warnings.
The Doctor is able to reach her only by allowing a Dream Crab to clamp on to him. He might only be able to synch up with Clara’s dream because he is holding her hand and he possesses his own telepathic powers. Otherwise it would not make sense for victims to continually be placed in shared environments if the aim is to give each their own perfect fantasy.
In the polar base the Dream Crabs can manipulate the body of their victims, causing them to lumber after those in the base. Lacking any sensory apparatus they use their telepathic field, picking up the thoughts of anyone thinking about them and using that to home in on.
Shona illustrates that if you are able to not look at them and think of something else you are invisible to a Dream Crab. The Doctor also believes that they would have been dormant in the ice caves beneath the base until the scientists spent enough time thinking about them. This suggests that the duration and intensity of the thought determines whether they awaken.
Within the dream polar station an attack from a person infected by the Dream Crab is symbolic, signifying that the alien dominated part of the mind has taken over completely. It is unknown whether the Dream Crabs can manipulate people in this way in the real world or what they would do if they caught people, since to infect them they’d need to abandon their current host.
When a person is able to awake from the Dream Crabs telepathic field it apparently kills the parasite, causing them to disintegrate. This happens in the real world which would indicate they have a physical form.
A big question left unanswered is how the Dream Crabs choose their victims and how do they reach them. Within the polar base scenario they are found dormant in an ice cave. When the Doctor wakes up he is outside the TARDIS and believes that he was the first victim and that the Dream Crabs found Clara in his mind.
While this might explain how the Dream Crabs knew about Clara it doesn’t indicate how they got to her. Did they control the Doctor and have him pilot the TARDIS to her? If so why did they then have him take the TARDIS somewhere else afterwards? If they didn’t were they already near Clara or did they have to travel there by some other means?
The Doctor suggests that the other victims were just collateral damage. This gives us no clue to why they were chosen. Were they random people that the Doctor or Clara had become aware of in passing (possibly parents or grandparents of children at Coal Hill School) but neither seem to be familiar with them.
The Doctor only knows of the Dream Crabs from legend, which indicates that if you think of them they will come for you. This might indicate that they are akin to the Mara, existing in a weird psychic dimension and only manifesting in the real world if given an anchor. This might explain why they disintegrate, as it is only a psionic shell.
If they don’t exist in the physical realm this could explain why they are legendary and the Doctor hasn’t actually encountered them before. As one of the few people who knows the legend it would explain why the Doctor was the first victim. This still raises the question of what caused him to start thinking about them.
There is always the possibility that there is no such thing as a Dream Crab. If the creatures are purely psionic then the Doctor himself might have given them form when he became their victim.
Like ‘Listen’ the Doctor could have spent too much time alone and simply hypothesised them into existence. The TARDIS could have skirted the Land of Fiction and uses some of its energy to give the Doctor exactly what he was thinking of.