a daydreamer is correct because head is in the clouds means not practical or not paying attention because one is lost in dreams or imagination.

This idiom or phrase is useful because it helps students understand the intended meaning beyond the individual words.

Examples: He has his head in the clouds and forgets simple instructions. A student with her head in the clouds may miss important details.

The phrase is figurative; it does not mean the person is flying or physically in the sky.