There seems to be an underlying assumption in your question that visualizing creates your manifestation and therefore you need to visualize better (i.e. not daydream) in order to get what you want.

This is incorrect.

You don't need to do anything at all except "feel good" to get what you want. Whether you do that by visualizing or day-dreaming is actually irrelevant.

Have a read through What should we imagine, visualize or believe? to get a more accurate view of the manifesting process.

If you've read that link above, you'll see that what you want is already created in the moment you wanted it. Visualization is just a process by which you allow it into your physical reality but it's also an optional step.

If you're not having fun in the visualizing (or the daydreaming), it is not helping you and you're better off just taking your attention off the subject completely and letting the thing come to you in its own time.

Regarding this statement...

However, these daydreams, wishes, whatever one may call it, do not materialize, basically implying that manifestation does not occur.

If you haven't got what you wanted that doesn't mean that a manifestation hasn't happened, it simply means you've manifested the absence of what you want instead of manifesting the presence of what you want.

Yes, I know that sounds like a trivial point and perhaps even sounds like just playing with words but it isn't. The idea is key to understanding why you are getting (or not getting) what you want.

There's some more explanation of this concept in Will my new house manifest?

I've read this question before and wondered myself. today, I finally got what daydreaming vs visualisation means to me, so I thought I'd give my answer. Actually, it's kind of similar to RPuls' answer.

When I daydream, I create a story in my head. It's a very pleasurable experience, but at the same time there's much room for doubt and fear, because it's all free-flowing and since I haven't planned it out (and even sometimes when I do try to plan it out), I can easily bump into 'triggers' that bring about doubt and make me feel down.

Visualising a storyline doesn't work for me - it just turns into daydreaming where I don't have much control over my emotions. Instead, I will get clear on what I want - perhaps by writing a list of the qualities I want in an ideal job if that's what I am going for. And then I'll put myself in a meditative state, and just flow my appreciation and other positive emotions towards that.

The trick is to fool your mind into thinking that you are in possession of your desired manifestation. Everyone is different, but for me, the feeling and emotion are much more important than the thoughts. If I daydream, or if I try to structure my visualisation as a daydream (i.e. focusing on the storyline rather than the feelings), it is way too easy for me to wander into negative emotional territory. But if I instead focus on feeling an emotion - contentment, excitement, etc- then that is the central pillar of the visualisation, and it's easier to get into the feeling place of having it rather than lacking it.

I hope this makes sense, I could have worded it clearer I think, but I'm still just figuring this out as well.

Instead of visualising try writing down what you want to happen in story format with you as the main character. This is one of the processes in the book "ask and it is given" called Scripting. Writing things down is a very powerful process.it brings your desires into the physical,and improves your point of focus helping you too stay focused. Do what feels good to you. If you don't like it try one of the other processes:)

Believing, deserving, and self-worth are important in your daydreams, visualizations or imaginings. There has to be an earnest wanting of the result you are trying to manifest. Then you must believe you deserve it, and believe you are worth it. Otherwise, no matter how much you visualize, self-sabotage occurs because either you feel you don't deserve it, or you think you're not worth it.

How are you feeling when you daydream? do you think it is just a passing fancy and it couldn't happen to you, self-talk saying "this is only a daydream" or are you serious and earnest in your wanting.

Daydreaming is just another way in which unconscious material arises to the surface. It can be used to become whole, but I don't think it works with manifesting. Manifesting is a conscious, focused process, whereas daydreaming is not.