As it is self-evident, this trope does have some basis in real life. Why this is so has various reasons.
Because dinosaurs are seen as monsters but are "safe"
Kids often like to admire things that have a sense of power and strength. This can also manifest into interests in cars, athletes, military equipment, or fictional characters like superheroes or monsters. As some of the largest animals to ever exist and a type of animal that doesn't exist in the modern day, non-avian dinosaurs fit the criteria. But unlike fictional monsters, which are often the products of horror movies that risk being very inappropriate for small children, dinosaurs are normal animals and can be presented without plenty of horror tropes. Blood, gore, and human munching are entirely optional and can be left out.
Dinosaurs have huge variety and make for easy teaching tools
There are currently hundreds of identified non-avian dinosaur species, which come in an enormous variety of shapes and sizes. This makes them very conventional for educational material meant for small children to teach them how to learn the names and tell the differences between the types. Given a majority of prehistoric animals have names that describe an attribute or location they came from, they also make for easy means to teach children about such traits.
Dinosaurs aren't subject to copyright
Unlike licensed characters like comic book heroes or franchise monsters, dinosaurs are not subject to any copyright. This means any company can create a dinosaur themed product and have built-in recognizable "characters".
Power
As
Dave Barry noted (loosely paraphrased): "No-one tells a
T. rex to go to bed. No-one tells a
T. rex not to pour juice all over the floor. A
T. rex can have ice-cream whenever it wants. If its parents try to enforce rules, it can just eat them." Dinosaur fetishization is borne out of young children's frustration with their parents' authority & rules. Being unable to control their own lives, and realising that their parents are now putting their own needs before the child's, causes upset and fantasies of being dominant.
