If I had to make an educated guess, I'd wager that (director/star) Ben Stiller and company considered the daydreaming angle as an afterthought that needed to be packaged into the pitch.
Hollywood today runs on pre-existing properties and the daydreaming angle is the baggage the film came with in order to get the requisite buzz. By adding daydreaming scenes, the film can properly bill itself as a remake or reboot of a live screen adaptation of a TV show/live comic strip/children's book or whatever it is (technically, it's a remake of a 1947 film adaptation of a short story if you were curious). The daydreaming concept also lends itself to fantasy and action sequences that look good in a trailer.
The story that I suspect Stiller really wanted to tell is that of an office drone reexamining the choices in his life that put him there (although it's definitely curious and slightly counter-thematic that the story gives him what seems like a pretty artsy job in a magazine's photo department). Sure, he might be courting a girl in the process, but "Secret Life of Walter Mitty" is a story about a man freeing himself from the conventions of adulthood.
Within this thematic thread, worldly photographer Sean O'Connell (Sean Penn) is Stiller's true prize. O'Connell is a man who has successfully absolved himself of adult responsibility. While his being impossible to track down makes for a great plot McGuffin, he can be a pain to work with for those in the real world but that's if you judge him through a real-world lens. The film does not.
Stiller's quest to track down one of O'Connell's lost negatives in order to save his real-world job (Adam Scott deserves credit here for reaching heights in obnoxiousness not reached since "Step Brothers") is where much of the film's screen time lies.
It's along this journey that we get a sense that Walter Mitty (at least this version of him) wasn't always so square. One of the opening scenes clues us into Mitty being familiar with a skateboard, but one of the key character tenets of Mitty is that he was once a punk (with a full mohawk to boot) who was pushed into adulthood too quickly as a teenager after the death of his father. Whether this version of Mitty exists from the original isn't something I can say for sure, but it certainly supports the thesis.
It's also worth noting that the film's technical wizardry is impressively used towards both of the disparate storylines. One of the film's most technically memorable scenes is when a game of soccer against a setting Himalayan backdrop segues into a scene of a man being frisked as seen through an x-ray camera. Until we learn that Mitty has been stopped by airport security, fantasy and reality are fantastically blurred here. Simultaneously, the thematic idea of being in a transitory space between conventional adulthood and childhood is all over this shot.
As for which story is the better one and how this affects the finished product, Stiller gets credit for splitting the middle between the standard fantasy-adventure-romcom and the more meditative angle, There's no short shrift to the relationship between Stiller and the love interest and nothing disappointing about the fantasy sequences.