You ever have that feeling where you're not sure if you're awake or still dreaming? -- Neo, The Matrix
Have you ever had a dream, Neo, that you were so sure was real? What if you were unable to wake from that dream? How would you know the difference between the dream world and the real world? --Morpheus, The Matrix
From Alice In Wonderland to The Wizard of Oz to The Matrix, literature is filled with instances where people find themselves having dreams they cannot differentiate from reality or wonder about whether what they are experiencing is real or not. At some point, probably many times, we have all waken in our beds with memories of vivid dreams that felt as if they were real as it was occurring. However, there comes a point in the path to enlightenment where we must look inside ourselves and answer the question: "Am I dreaming, even when I'm awake?"
When we talk about a person dreaming while awake, we don't mean a heavy sleeper, a narcoleptic, or some other form of confusion between being asleep and awake. Instead, this is an issue of enlightenment. Of knowing whether we are looking at the life we are living in an honest manner or whether we are, quite simply, dreaming. One may want to quickly answer that they are not dreaming in regards to their life. I think those quick answering people who may be disillusioned the most.
Part of the problem of differentiating dreams from reality is that we grow up spending more of our childhood in dream worlds. We fantasize about what we want to be when we grow up. We fantasize in our childhood play with friends and on our own. Some children have imaginary friends. All of this is normal childhood development. The problem with this is that as we grow up, we may not be able to fully relinquish the desire to spend our time fantasizing about how life can be, how we want it to be, what we wish it were.
A big component of confusing reality and fantasy is how we form the situation in our minds. One should be critical of how they percieve what is happening around them. Examining a situation from multiple viewpoints will aid you, as you may start to see some of the fallacies you are using to convince yourself that an event is not the way it really is.
Unfourtunatly, there is no easy solution to this problem. Part of the journey of enlightenment is the ability to recognize the true realities of life as we live it. One must put one foot in front of the other to walk the path.