In order to discuss this topic, I would like to put the main focus on lucid dreaming. How do we distinguish what we see to what we “see” when we dream? How we see things in real life is not just through perception, but you create the final image of being through the other senses, such as smell, hearing, taste, just as much as seeing.
For example, when we dream you cannot know, unless you have mastered lucid dreaming, that what is going on, is in fact, a dream. When you know the technique of lucid dreaming you have control over your dream, and over that “parallel universe” that is supposed to represent a different world from the real one. You create the scenery, you define yourself, and you choose who and what is happening in it.
If we look at the rational side of the answer to this question, it would seem quite easy to truly answer it, but the problem is how to explain what actually is going in your head during dreaming and well, living, when it is acknowledged that we can very easily fool our senses to make what is going on, believable.