I have never been satisfied with the usual cultural and scientific views on sleeping and dreaming.
These see sleep and dream as both subordinate to awake life, and also as optional extras.
Behind current concepts is the idea that it would be better not to sleep at all, but if we must sleep then it should be as little as possible.
By contrast, I tend to think that sleep is, in a sense, primary - at least in its creative and generative role -
I think it possible that sleep (or equivalent but weaker states which occur during awakeness, daydreaming trances etc) produce most of our subjective 'experience' - which is then shaped and fitted to the world around us during awakeness.
Valuation of dreaming is split between a minority of people who regard dreams in a distorted and exaggerated way as the royal road to understanding neurosis (Freudians) or to understanding the prerequisites for personal growth (Jungians); and the large majority who see dreams as (merely) a kind of entertainment.
A few who trivialize dreaming regard them as a kind of home movie, which might be controlled and made more enjoyable - e.g. people interested in lucid dreaming.
And of course the highest value on dreams is placed by 'shamans' - in the broadest sense of the word - who regard dreams as a source of arcane knowledge; and in some societies these individuals are accorded high social status.
I am unconvinced by psychodynamic concepts of dreaming since most people do not remember their dreams most of the time - so it seems unlikely that dream recall is of the essence.
Like Tolkien, I believe that dreams can, by various mechanisms and routes - some psychological and others revelatory, be a source of knowledge otherwise unavailable to the awake mind; but I regard this as a rare gift (and one usable for evil as well as good).
What what about 'normal' people who certainly dream but cannot remember much about it: people like myself?
Dreaming certainly feels important to personal well-being (I regard this insight of Jung's as correct), and if so this means that dreaming does its work whether we recall dreams or not.
In a nutshell, I believe that dreams are important in giving 'depth' to our subjective experience.
Without dreaming I think that life would be a matter of 'what you see is what you get' - like watching soaps or the news on TV - a matter of emotional stimulation by this, then that, then something else.
With dreaming, our minds make connections and relate things to one another; so life has at least a semblance of being whole.
Of course, since we fill our minds with dross, our dreams don't have much to 'work on'; nonetheless they do what they can.
And, of course, since modernity regards sleeping and dreaming as a big waste of time, we don't sleep enough and do things which probably damage our dreams; and so get less good from this than we should (or could).
But, since most dreams are not remembered, how could we know any of this? How would we know if dreams were doing this kind of work?
Well, there are theoretical arguments such as I make in the co-authored paper linked above (which I think is one of the best - or at least cleverest - things I ever did in psychology - although naturally it has been completely ignored).
And there is introspection (what the German psychiatrists termed phenomenology), i.e. awareness of one's own psychological states - which ought to be regarded as a vital check on all psychology and psychiatry.
Introspection is an ability which varies quite widely between individuals, and can also be trained or suppressed - and bear in mind that introspective ability is quite different from the ability to write on the subject of inner states.
Jung was a hugely naturally-gifted introspector who developed this ability, Freud seemed to have no abilities at all in this domain - but Freud was a much better writer.
Among modern writers Tolkien was an introspector of genius and also a writer of genius - so is a primary source.
I conclude that if we introspect we know that sleep and dream are very important indeed.
At the very highest levels, ascetic Saints seem to reach a state in which sleep and awakeness merge and fuse; but at the lower levels the rest of us inhabit, sleeping and dreaming represent a vital alternation of human being - even though we can seldom recall or discuss explicitly and exactly what they are doing.