Everything you see in Dreamscaper resulted from both ends of the process. Some of the places were mere concepts at first (and I have some still that I may use later on), while others came from song inspiration or just popped into my head one day and I thought "FUCK this needs to be in Dreamscaper lololol".
Same went with effects as well, too. As of now they don't really symbolize anything but it can mean whatever you want it to be. However there were a few that I felt were like "necessary effect"s, effects that nearly every game has: Weapon, Animal, Hairstyle, and Light. Although in some effects Natalie's hair changes style, I'm still wanting to do a Hairstyle effect for all it's own.
As for chipsets I make it from the template of the "world" chipsets with a paint program, add a new layer for the chip I'm going to make over it, then delete the "world" layer, and save it. However some don't make it in or some were reused to make others (early on, I don't do that anymore), and for the ones that do not make it in... probably will in the future.
tl;dr It's half and half. :D