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Sigmund Freud and Carl Jung put forth some of the most well-known theories of dreaming.
Recent studies suggest we employ the same neurophysiological mechanisms while dreaming that we use to construct and recall memories while we are awake.
Studies also found that vivid, bizarre and emotionally intense dreams are linked to parts of the amygdala and hippocampus. The amygdala plays a key role in processing and memory of emotional reactions. The hippocampus is implicated in important memory functions, such as the consolidation of information from short-term to long-term memory.
Dreams seem to help us to process emotions by constructing memories of them. The experience in our dreams may not be real, but the emotions we experience are real.
Our dream stories try to strip emotion out of some experiences by creating a memory of it. This mechanism seems to fulfil an important role because it helps us process our emotions.
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