Princess Luna watches over the dreams of the ponies of Equestria at night. She has faced lots of nightmares, ranging from those of a troubled foal needing to be soothed to those of an old pony still haunted by disasters past.
It's not as appreciated as what Celestia does during the day, but at least it keeps her busy.
However, she soon makes a new enemy in the form of a dream demon who has negative effects on innocent poines through their dreams. Corrupting ponies' magic, abducting souls, and even killing them.
Said demon crosses the line by kidnapping her sister's soul and not allowing her to wake up.
That demon must be stopped.