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As AlphaGodith said, there is a limited number of dreamstones. What Marlo is offering you is the ability to convert an upgraded dreamstone back to the base form. So say if you have a valley dreamstone and you wanted to re-use it for a forest biome, you take it to Marlo to turn it back into a regular dreamstone, then set it down at home and craft it into the forest dreamstone.
As counter-intuitive as it sounds for all these cute dino buddies, it's more efficient to keep only 1 of each species if possible to minimize dreamstone usage. For a game all about friendship and forming bonds with your dinosaurs, I sure am ruthless releasing my demo Ankylosaurus for a new one with rarer colors because I can't afford to keep two ankylosauruses when something else can fill the spot lol.
No, there's a finite amount of them hidden in certain spots, usually behind obstacles that need Helper dinos. That and the fact dinosaur colors and spawns are preset to that one day and can't be reset, the devs are trying to make your dinosaurs feel more like individuals since you can only have so many. However, I heard there's more than enough Dreamstones to have several of your favorites anyway, so really it's just so you don't go ham with your ranch and have 60 nameless dinosaurs around.