My Bonnie Lies Over the Ocean

My bonnie lies over the ocean.

  My bonnie lies over the sea.  

My bonnie lies over the ocean.  

  Oh, bring back my bonnie to me.  

I learned these immortal words when I was three or four.  I puzzled over them.  Who was Bonnie?  What was the ocean?  What was the sea?  How would anyone lie "over the ocean"?  Did this mean they hovered over the ocean?  They were on the other side of the ocean?  Are they lying down?  Or does lie have more meanings?  

It gets worse:  

Last night as I lay on my pillow, 

  Last night as I lay on my bed, 

Last night as I lay on my pillow, 

  I dreamed that my bonnie was dead.  

Whaaaat???!!!  Someone's playing with my head.