Mercutio is a young man that “loves to hear himself talk” according to Romeo (Act 2, Scene 4, enotes etext pdf p. 53). He has a vivid imagination and a clever tongue, and he loves to tell bawdy jokes and make puns. His Queen Mab dream is a perfect example of his reflective, sweeter side.
When Romeo says “I dreamt a dream to-night,” Mercutio chimes in, taking the spotlight for himself. He begans a vivid description of Queen Mab, a fairy Mercutio (and Shakespeare) seems to have made up on the spot. He describes her as the “fairies’ midwife” which can be interpreted to mean the one that delivers fairies. She is smaller than a stone, and has a carriage made of an empty hazelnut and her wagon’s spokes are made from spider’s legs, and the wagon’s cover is made from grasshopper wings, and the ropes are made from spider webs. Her whip is a cricket’s bone, and her driver is a gnat (a small fly).
Queen Mab gives people dreams of the things they want. She travels into the dreams of people in love, making them dream of love. Courtiers dream of curtsies, lawyers dream of fees, and ladies dream of kisses. But sometimes an angry Mab leaves plagues instead, and she brings people nightmares.
This is the hag, when maids lie on their backs,
That presses them and learns them first to bear,
Making them women of good carriage. (Act 1, scene 4)
When Mercutio starts getting into this bawdy joke, Romeo interrupts.
I have included a translated version of this scene to help you as well.