What Odin offers Sandman (AKA Morpheus, AKA Dream) is a simulated world created by Odin who had been searching for a way to thwart the real Ragnarök. A simulation in which most of the Justice Society of America had been caught, including the Hawks and Golden Age Sandman who, it is established, has some of Morpheus' or The Dreaming's essence in him.
To be specific in 1986 DC Comics decided to write-off the JSA from active continuity. The result was the Justice Society Special: Last Days of the Justice Society, a one-shot story involving most of the JSA. In the story, written by Roy Thomas, the team is forced to battle in an ever-repeating Ragnarök-like Limbo.
Only Power Girl, the Star-Spangled Kid, the Spectre and Doctor Fate escaped the cataclysm.
A minor retcon by Neil Gaiman, along with Matt Wagner, suggested that Golden Age Sandman's (Wesley Dodds) chosen identity was a result of Dream's absence from the realm The Dreaming [events covered in Preludes and Nocturnes], and that Dodds carries an aspect of that mystical realm. This would explain Dodds' prophetic dreams in the DC Vertigo series, Sandman Mystery Theatre by Matt Wagner.