I imagine the dream world is a mirror; we exist there as fully as we do here. In my waking state, I have only the vaguest remembrance of dreams. A glimpse quickly forgotten.
The secret to dreams is knowing they're dreams; easier said than done. If I knew I was dreaming, would it be a dream? Is the world of dreams a country with arbitrary borders and strange laws? Or is it the other way around?
There is a veil between the two worlds; sometimes the veil is lifted, and we see through to the other side. We are left with the feeling of something familiar, yet forgotten. The only thing lucid is whatever side of the veil we're on. And sometimes even that is subjective.