Why does it seem that the content of nighttime dreams, as far as the people, situations and events, is often different from the thoughts and feelings that arise during the daytime?
The karma of day and night is different. In the day we have the karma to go to work, make money, chase girls, get a guy, raise a family and so on and so forth. Then we are exhausted from that karma and conk out at night. Not ideally, but this tends to be our cycle. Even within the night, we will likely have different dreams at 11 p.m. than at 3 a.m. or 6 a.m. Don’t assume it’s just a day and night dichotomy, but we have different karmas based on things we did previously, in many past lives, at various times of the day.
To practice dream yoga properly, know that it is irrelevant whether you have pleasant dreams or bad dreams. Perhaps it may be relevant to some degree, but the point is they are still dreams. Understand the quality of dreams: although things seem real, very important and ultimately true, they are not. If you can begin to get an iota of a sense of that, then you are starting to do dream yoga a little bit. If you think you are having a deep and profound realization right away, it may be fake and you may be fooling yourself. It’s a subtle thing, and you need to realize that the dream is not true. It doesn’t matter whether it’s day or night—handle both in the same way, with a sense of humor and irony, since there is nothing substantial in them.
Let’s say that a monster is chasing you, and you wake up from the night dream. You laugh, thinking, “There was no monster even chasing me. Thank goodness!” That is a fine start to dream yoga. The next thing to do is to make a wish: “Next time I’m going to wake up right in the dream. I'm going to let the monster catch me or watch the monster dissolve.” It won’t really matter because when dreams are observed, their sense of realness disappears. If you can be successful in this phase, the diaphanous quality, the luminosity of all the energy that the mind uses to make these things up, returns to your experience because of the opening to the natural state. You can see without a doubt that your own acquired karmic tendencies are shaping the dream energies, creating the visions and stories. It's you chasing yourself, worrying, creating samsara, creating suffering. Then the negative creativity can stop creating itself by this insight.
And when the fear is gone, suddenly the dream, instead of being samsaric, arises as various lights, rainbows, circles, spheres, rays or radiations. These forms are the more underlying logos of everyone's "mind art," the basic structures and elements behind mind’s natural creative powers, as the outer, convoluted, karmic distortions fall apart.
The same principle applies during the daytime. You can start with being honest and admitting, “I think my mind is real. Right now I’m thinking about what I’m going to do after I read this chapter, but that’s entirely my imagination. There’s nothing there but me. There’s nobody else there. There is no environment; it’s just my imagination of the environment.” Even as you look around the room, or if you’re sitting outside looking at a tree, that’s still not the tree—it’s just light bouncing off it, going into your eye, and your imagination and clinging about it.
Only a buddha doesn't cling or a little baby. That is why we are told in the Tao teaching and in Jesus Christ’s words to become like a little baby. We need to become like a small child—not just a child, but a small child—a little baby with that fresh looking at everything. A baby doesn’t know how to judge yet. All a baby knows is a breast and a mother’s face, and everything else is like a magic display. A buddha sees everything identically as a baby, as a magical display of playful creativity, no matter what it is. The baby doesn’t care if its surroundings are dirty or clean; it is fun to play in them regardless. The only difference is that the buddha is fully enlightened and has eliminated their karmic tendencies and residue, whereas the baby is going to grow into those karmic tendencies; also, the buddha can understand all of the adult dysfunctions of samsaric mind and help all beings, whereas the baby can’t help anybody necessarily except as an example.