Dreams are of three types, the sub-conscious dreams, conscious dreams and super-conscious dreams.
Sub-conscious dreams are the projection of memories in subconscious on the screen of consciousness. These are our most common dreams. These are non-structured, haphazard and vague dreams and difficult to remember with any degree of clarity. They can come at any time of the day. They do not mean much except the fact that they indicate baggage in sub-conscious memory.
The super-conscious dreams are the dreams that feel very real and can be distinctly remembered with clarity after waking up. They come in early morning hours (Brahma Muhurtha, 4-8AM), usually they are either about our previous life or events to take place in the future. Some times these give guidance to the direction that we need to travel. These dreams come to people who are pure at heart who are sincere seekers of Truth. These are dreams that take us beyond the limits of time and space either into the past or future. These are also called prophetic or epic dreams by some.
The conscious dreams are nothing but our own day to day lives. This is our life of duality perceived through the glasses of MAYA. Though we feel that this life of duality we lead is very real, it is in reality a waking dream state of us. The ultimate truth is Unity and Oneness. Till we wake up to that reality of Oneness in creation, we are considered to be in our dream state by the realized souls. Our life is a waking dream state. This waking dream state is bound by time and space elements. When we wake up to the reality of Oneness in creation (Moksha), we transcend the time and space elements of creation. It is a paradigm shift in our consciousness, that the realized souls talk about. This is a state of experience.
In Bhagavad Gita it is said that the wise are awake when others are asleep and the wise are asleep when worldly people are awake. This means that when ordinary people are living the day to day life in the world of duality (waking dream state-conscious dreaming), the wise are sleeping to this world of duality and dwelling (awake) in the world of unity. The reverse is also true.
Awake means awake to our true self of Oneness and sleep means living in the world of duality. Awake means transcending time and space limitations and asleep means bound by time and space limitations. Time and Space determine if we are awake or dreaming (sleep).