I know sometimes it may look like I'm totally spacing out and daydreaming. What I am actually doing is working on another book plot. Okay, sometimes I'm just drifting. But I do find daydreaming helpful in writing fiction. I just think of a situation using the "what if" technique and we're off and running.
What's really fun to think of things that actually happened back in high school or college and think "What if I had done/said something different? I was a little more shy and awkward than your average teenager and had this bad habit of saying or doing things to completely embarrass myself. But with my characters it's a different story. They may say or do stupid things (wouldn't be much of a story if they were perfect), but they can somehow go back and fix what went wrong. I can have a character say that perfect comeback that I thought of years too late.
I wonder if that really cute guy from high school will recognize himself when my YA novel is made into a movie? What if I turn him into a football player instead of a . . . um, never mind.