There Is a movie I watched when I was younger and can't seem to remember the title to. It involves a blue horse that is made out of a type of fabric, and is surrounded in a world of sheets and pillows. Thats all I can remember but If you have any ideas feel free to help me out!
Was it a blue camel? Sounds like Raggedy Ann & Andy: A Musical Adventure. It has blue camel and at one point in the movie he does look he surrounded in a world of sheets.