There is no difference between the dream and the waking state except that the dream is short and the waking long. Both are the result of the mind. Our real state is called turiya, which is beyond the waking, dream and sleep states.
The Self alone exists and remains as It is. The three states owe their existence to avichara (non-enquiry), and enquiry puts an end to them. However much one may explain, this fact will not become clear until one attains Self-realization, and wonders how he was blind to the self-evident and only existence for so long.
All that we see is a dream, whether we see it in the dream state or waking state. On account of some arbitrary standards about the duration of the experience and so on, we call one experience a dream and another waking experience. With reference to Reality both the experiences are unreal. A man might have an experience such as getting anugraha (grace) in his dream, and the effects and influence of it on his entire subsequent life may be so profound and abiding, that one cannot call it unreal - whilst calling real some trifling incident in the waking life that just flits by, which is casual, of no consequence and is soon forgotten. Once I had an experience, a vision or a dream, whatever you may call it. I and some others, including Chadwick, had a walk on the hill. Returning, we were walking along a huge street with great buildings on either side. Pointing out the street and the buildings, I asked Chadwick and others, whether anybody could say that what we were seeing was a dream, and they all replied, ‘Which fool will say so?’ We then walked along, entered the hall and the vision or dream ceased, or I woke up. What are we to call this?
Just before waking up from sleep, there is a very brief state, free from thought. That should be made permanent. In dreamless sleep there is no world, no ego and no unhappiness, but the Self remains. In the waking state there are all of these. Yet there is the Self. One has only to remove the transitory happenings in order to realize the ever-present beatitude of the Self.
Your nature is bliss. Find that on which all the rest are superimposed and you then remain as the pure Self. In sleep there is no space or time. They are concepts, which arise after the ‘I-thought’ has arisen. You are beyond time and space. The ‘I-thought’ is the limited ‘I’. The real ‘I’ is unlimited, universal, beyond time and space. Just while rising from sleep and before seeing the objective world, there is state of awareness which is your Pure Self. That must be known.