[It's strange to be explaining her lasso to a stranger, but it seems unavoidable here. After all, she's in a dream. The harm from someone knowing the truth should be more minimal than in real life, right?]

It is the Lasso of Truth. It has the power to compel someone to reveal the truth, as well as show them the truth. That's what powers it, and the truth is greater than any of us. Even a dream. Which is why I don't understand how it's being affected here.