1. Do animals wake up from dreams and think, "Oh, phew, that was just a dream?" Or what?
2. Is our love for stories related, on an evolutionary level, to dreaming? John Gardner famously said fiction should produce "a vivid and continuous dream." If dreams help us organize and interpret our daily experiences, does fiction do the same thing?
I am thinking of how some dreams are more absorbing and more memorable than others. Sometimes I have dreams in which I seem to be doing real work in real time, like preparing a lecture or editing a document, and wake up frustrated that I have literally nothing to show for my labors. I have dreams in which I'm utterly frightened, and some in which I'm sad but also interested in what's going on--for instance, my dad's still alive and sort of hanging around while the rest of us go about our business. I know he's not supposed to be there, and he seems to know it too, but I'm still terribly glad to see him.
Often, as when I read novels, I don't retain the plot of the dreams for very long, only an emotional impression. But this impression can be very strong.
My point is, dreams and fiction seem absorbing in similar ways, and might fulfill similarly complex purposes for our brains. We have a little more control over what we read than what we dream, though maybe not as much control as we think. But the fact that we crave stories, and the fact that all of us dream, suggests the two experiences are deeply connected.