Hi Robert -
We have learned a lot over the last forty years about sleep and dreaming, most notably that dreaming is driven by an inner generator that regulates its length, occasion, and oscillation between it, and, as you say, non-REM, or non-dreaming sleep. My book, Stop Sleeping Through Your Dreams covers this history in detail. Excerpts are available by clicking here.
A very recent study I saw showed that PET scans of the brain reveal less forebrain activity during dreaming than waking, and increased lower brain activity, which is asociated with emotions. This fits with the general description of dreaming as we understand it, that it is an event that is largely devoid of critical or reflective ability. Critical ability and consciousness are known to be neurally located in the forebrain region.
A modern view of dreaming recognizes the neurobiological sub structure of the event - it is an inexorable element of human (and mammalian) physiology and neurophysiology. The content remains important in that it reveals how this material is associated and responded to in the dreamer’s mind. This is why dream analysis is valuable to us. The fields are not exclusive; we need to view them inclusively. Both are valid observations of the phenomena of dreams.
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