That's the problem with dreams, where they occur is really a mystery to us.
I though I heard something before, that when you dream your brainwaves are almost as active as when you're awake (don't quote me on this, I don't remember) so if they are, where's all tht energy going? You surely don't use that much for pure imagination.
Also, I tend to find I'm still tired after I've had a night with heavy dreaming, even if I have manymany hours of sleep.
Now, this leads me to believe that NiGHTS, the dream world (whatever its true name is), and everything else you see in you dreams may simply be but a glimpse into another world, and that it's all real.
But I've never seen NiGHTS for much longer than a split second; he was darting past through my dreamscape once; The purple regular guy in my dreams is Katun, not NiGHTS. But you can feel your heart leap when he goes by. You can't expect to see him too often, there's only one NiGHTS after all, he's got a whole dimension to explore XD
But anyway, to summarise: NiGHTS is as real in a dream as you believe him to be
