Glad that you asked! You see, I always liked the idea that Dream XD is not a benevolent kind of god, more like a demon if anything (hence why it's mostly known as a dreamon)
So what would happen if a sad lonely fox decide to make a deal with said god because he looked like his ex fiance?
Why, he'll get their undying devotion of course
But with a prize
His soul would be constantly munched upon, not completely though
Fundy can never die, so he can feed from them forever :) (that's why Fundy wasn't afraid of dream's sword, it would be useless)
And go into dates through their neverending nightmares
I also made mentions of that Headcannon idea in this and this old posts
The thing is, in my au Fundy eventually get together with Dream again, and both being married, and dating George as well (who is not into marriage)
So Dream XD decided to capitalize on that and make another deal with Fundy
Keep their precious family alive and well, in exchange of his and George's souls
Which sadly, they accepted
@thenaiads