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Full: For 10...22...25 seconds, whenever target foe suffers from a new condition, all foes in the area suffer from that condition as well. If target foe has two or more conditions, that foe is Dazed for 1...3...3 seconds.
Concise: (10...22...25 seconds.) Foes in the area also have any new conditions that target foe acquires. Inflicts Dazed on target foe (1...3...3 seconds) if that foe has two or more conditions.
Take note of the wording: Fevered Dreams does not trigger just because a condition is applied (or re-applied) to the foe. Here, "new condition" literally means a condition that the foe is not currently suffering from.
The Daze is applied when the hex is first cast, as long as the foe already has 2 or more conditions, and from then on it is applied every time the foe gains a new condition while suffering from at least 1 condition already.
The Daze also spreads when triggered, allowing this skill to be used to daze a large number of foes.
Consider combining with Hypochondria to further manipulate conditions.