I always thought that the Dream Zanarkand was just that: a dream. I had no idea that it was an actual physical place just some distance away from Spira. I thought it was just a metaphorical creation within the minds/conciousness of the Fayth as one giant collective. Since Sin is an Aeon technically he could simply be "unsummoned" and sent back into the conciousness of the Fayth to Dream Zanarkand. Remember that Sin is pretty huge, so you'd think that people would be able to keep tabs on it to some extent, but it seems to just appear from nowhere then it attacks. I mean, how on Spira did it get under that frozen lake without breaking the surface?