I remember I bought a little dreamcatcher at some historical fort site in the Midwest, US, that my family visited on vacation in the late 90s. It was a small hooped object wrapped in leather with webbing across the center and delicate feathers hanging down. I hung it on the wall above my bed. The web was supposed to catch the bad dreams and let the good dreams flow down the feathers into the sleeping person's head (me) resting below it. So my question is what's the deal with these objects? Did any Native American cultures actually use dreamcatchers, or are they a complete misappropriation of Native American culture to sell tourist trinkets? If they really were used historically, what indigenous groups used them? What did these objects mean for indigenous people or what religious beliefs/cosmologies do they reflect? If they are not actually Native American, where did they come from and why are they viewed as something authentically Native American?
So first of all, I'm an Anglo-American archaeologist, and so I won't to speak to what the dreamcatcher means to modern indigenous peoples - either as a cultural object or one of economic opportunity.
I will argue, however, that the modern dreamcatcher as an object has a grisly history rooted in the practices of Pre-Columbian warfare and later, warfare between early modern colonists and indigenous peoples.
The first thing to acknowledge is that the martial practices of Pre-Columbian peoples cannot be generalized as a whole. At the same time, we can recognize that in many New World contexts, warfare had some fundamental differences to European warfare. One of the most critical is a focus on captive taking. This practice had variants as far as Mexica raiding for sacrificial victims to the captive taking of the Northeastern US, where captives would either be adopted into a new kinship system (often helping to settle feuds) or ritually tortured (we know that warrior-aged men were more likely to be put through the latter, with a cultural focus on remaining stoic throughout the experience).
However, sometimes you can't take a captive. Perhaps they are too great a warrior to be taken alive, and you land a killing blow. What's the next best thing? Their scalp. Moving more into the context of eastern North America, we know that scalping was at least an occasional practice prior to European contact. A member of the de Soto expedition was apparently killed and scalped by an Appalachee warrior. We also know that in other geographic contexts scalps were sewn into hoops to dry/tan, decorated with string and feathers. (Axtell and Sturvevant: 456) These hoops are reminiscent of a spiderweb because that's the only way to sew a human scalp to a ring. While these objects have been repatriated as human remains in the US due to NAGPRA, they still exist in a few European museums (in back rooms where curators don't have to explain how a colonial museum continues to hold parts of Native American ancestors). The British Museum has one from the colonial or early national period, though obviously photos aren't available online.
Edit: u/aquaphobic_goldfish found a photo using Google Arts and Culture. Warning: photo contains human remains.
The question, though, is whether the practice was truly widespread prior to European contact. There is no doubt that colonial bounties on Indian scalps (to use the phrasing of the time) increased the rate of scalp taking. Likewise, scalp taking was practiced by both Native and Colonial war parties throughout the colonial period. To focus on native savagery in explaining scalping and to ignore the role that European demand and the market economy, as well as European responses in kind, had in promoting the practice would be to play into a colonial narrative of the savage and violent native that needed civilizing. (Peotto 2007; Ball 2013)
To get from scalp hoop to dream catcher, you essentially keep minimizing the role of the scalp and emphasizing the role of the string, as rates of violence decline, until you end up with a decorated hoop of string that looks like a web. While there are of course multiple native mythologies that point to the role of a dreamcatcher in their tribal spirituality, I do think it's worth pointing out the similarities in form with the scalp hoop. It is also obviously true that what a dreamcatcher means today (to different tribes and different individuals) could be totally divorced from what it meant in the early modern period.
Other Sources:
Axtell, James, and William C. Sturtevant. "The Unkindest Cut, or Who Invented Scalping." The William and Mary Quarterly 37, no. 3 (1980): 451-72. Accessed May 22, 2020. doi:10.2307/1923812.
Edit: multiple early edits to make some of my wording a bit more precise.
Dreamcatchers are generally believed to be related to the legends of the Spider Lady, who contrary to what might be the expectation of a modern European audience, was actually a good figure to indigenous American peoples across the very broad range of Western North America. Spiders feature positively in Southwestern (Puebloan and Dine cultures), Plains (Siouan and Oji-Cree cultures), and others as well, but let's focus here particularly. I do not believe all of those cultures, despite having good spiders in their legends, have quite particularly the Spider Lady we are looking for.
So, the Ojibwe nation is actually considered a particular origin point for the dreamcatcher concept. Ojibwe trinkets meant to mimic spiderwebs were known from at least the earliest 20th century and probably much earlier - the first written appreciation of an item does not preclude that item's widespread usage prior. These charms, meant to represent spiderwebs in appreciation for the Spider Lady and with some associated legend about a spider weaving a web to protect a wise woman from malicious spirits, there is no definitive legend about the origin but the spider thread runs between them all. That is, ultimately, why it has the appearance it does.
Their current usage, though, might be considered somewhat controversial by those a hundred years ago. Some evidence suggests these weren't just wall-hangers as they so often are treated today, but instead, a form of protective magic equivalent in the West to eyes and hamsas. One quote describing this, also among the first written accounts of the 'dreamcatcher' goes thus:
[...] the "spiderwebs" hung on the hoop of a cradle board. In old times this netting was made of nettle fiber. Two spider webs were usually hung on the hoop, and it was said that they "caught any harm that might be in the air as a spider's web catches and holds whatever comes in contact with it."
One of my sources here quotes:
These dreamcatchers are usually hung on the child's cradleboard and the child is meant to be entertained by the feather as well as be given a lesson on the importance of good air.
Although this latter source describes them using explicit terminology referencing their use in keeping bad dreams away, it also mentions the web being effective against 'bad air' and 'bad spirits'. This usage is also paralleled among the Lakota, who make equal claim to the Dreamcatcher, and indicate that despite many today popularly associating it with the Southwest (which has its own slew of Spider Lady stories), it may have actually originated among cultures of the Northern Plains.
While it does appear that preventing bad dreams was one intended use of the Dreamcatcher originally, it was certainly not the only one, and the primary uses of this item (a repellent of evil broadly) have fallen to the wayside in its widespread appropriation - perhaps as a factor of removing things distinct to indigenous culture and keeping what a wider, whiter audience could understand (dreams). Even the notion of dreams, though, is different to the Ojibwe than to the average Anglo-American, on a cultural level. While they are a symbol of the Pan-Indian movement today, there is no small degree of New Age Plastic Shamanism involved with their dispersion throughout wider society. Opinions involving the non-indigenous use of dreamcatchers are generally mixed, though not universally frowned upon. I am, personally, of the belief that they can be appreciated in the right context and with proper understanding, especially if purchased from indigenous persons, but as with most things the Plastic Shamans must be avoided as much as possible.
All this said, here is a summary of the questions asked and the answers:
Yes, they originate from the cultures of the northern Plains, and particularly the Ojibwa and Lakota nations have legends pertaining to their origin.
The opinion on this is mixed. Some are okay with non-indigenous people using them, others are not. They have taken a new life and meaning in New Age movements and among Plastic Shamans, and to my understanding these are more widely frowned upon than general, generic use.
Dreamcatchers were originally a sort of ward against harm and evil, similar to the eye amulets or hamsas of Western tradition. While they did originally 'capture' bad dreams as well, this was a mere extension of preventing evil spirits, magic, bad air, etc. from reaching its target, not as the sole dedicated use. They were eventually appropriated as a symbol of the Pan-Indian movement, and so gained a sort of neo-traditional status in a lot of communities that did not originally use them as a token of cultural expression and solidarity with their fellow indigenous peoples.
A bit more explanation on what dreams mean to the Ojibwe, since I mentioned that earlier:
According to some of my sources, among those already linked in this answer, it is mentioned that the Ojibwe believe in two or three distinct types of soul, something shared in common with several other indigenous peoples, including some in South America (particularly, in my reading, Carib peoples). Dreams are considered a sort of projection of one of these souls, in my source called the "Shadow Soul", into the spirit world, a world of prophesy that can influence important decisions like the name of a child or one's ideal path in life. In this case, dreams are similar to meditative traditions in other cultures, being a state where one's truer self may become better understood.
Dreams are said to "open the mind to the interdependence between body and spirit", between the physical and immaterial worlds. A dreamcatcher, in this case, would not just be warding off mere nightmares, but instead keeping away bad prophesies, bad futures, malevolent spirits. The belief that the physical and immaterial world are in continuum, rather than entirely separate realms, is key, and with this understanding one must understand that malevolent entities or happenings in the spirit world (as seen in dreams) may then reflect in the physical world in a very real sense. Thus, by stopping bad dreams, it also prevents such bad things from attacking an individual in waking life, of guiding their life to misery or a bad end, much like the western concept of a curse, an evil eye, or in times past the evil magic of witches in league with Satan. The dreamcatcher was a means to prevent and avoid these supernatural inflictions, not just to have a good night's sleep, and explains how and why it being a semi-permanent fixture on a baby's carrier could help the child even while awake.
I figured it was a slight tangent to the question itself, but if nothing else, this should hopefully satisfy loose ends regarding the beliefs reflected by the original use of the dreamcatcher. I can try to supplement more if you have follow-ups, but I've been not as active as I once was, so I might not respond too soon - maybe a few hours, maybe a day or two, less than three days probably.
EDIT: Thanks for the gold!