In our dreams we are aware of sights, sounds and sensations happening around us. We see dream colors, hear dream music, smell dream fragrences, and taste dream food. We are aware of our bodies; we think and reason; we feel fear, anger and love. We experience other people as individuals separate from us, speaking and interacting with us. In the dream it all seems very real, and appears to be happening out there in the world around us. But when we awaken we realize that everything in the dream, including our own body, was a creation in the mind. It was all just a dream.
It was just a dream in so far as the image created in the mind was not based on physical reality. It was created from memories, hopes, fears, unconscious needs, and other influences. There is no input from the outside world„or rather very little input; the sound of a banging door may filter through and be integrated into the dream reality in some way, but most of the data is internally generated.
The difference with waking consciousness is that the image created in the mind is based primarily on sensory data drawn from our physical surroundings. This gives our waking experience a consistency not found in dreams. We don't suddenly find ourselves transported to a completely different location, conversing with someone we've never met before. We don't find ourselves flying magically through the air. We don't find physical reality transforming before our very eyes. When we are awake, the images created in the mind bear a direct relationship to the physical world around us.
Our sleeping dreams are private affairs. Whatever I may be dreaming usually has little similarity to what my partner lying next to me may be dreaming. They are based on different inputs. Our waking experiences, on the other hand, are based on very similar sets of data. The light reflected from a tree to my eye is the same as that reflected to another person. The images created in our minds are, as far as we can tell, identical; we are likely to find ourselves agreeing on everything right down to the finest details of the color and structure of a leaf or thorn. This confirms our assumption that we are experiencing reality as it is, "out there", around us.