Dreams and Reality

One thing that puzzles me more and more is how we distinguish dreams and reality. Now this may seem like The Matrix induced nonsense but this has bothered me since I was a kid. I have some pretty weird dreams and a lot of what I guess we call nightmares. I have lucid dreams - dreams in which I can control myself and my environment; and I have dreams which impact me in the "physical world" i.e. the real me.

So, I thought I would investigate this and see if I could get some answers. As per usual, the internet delivers more information than I could possibly read in a lifetime. Certainly, there is enough out there to make me believe I am not the only mentalist thinking about these things.

Zhuangzi (369—298 BCE) or "Master Zhuang" was apparently ranked among the greatest of literary and philosophical giants that China has produced (read more here and here).
Zhuangzi wrote "Dream of the Butterfly" which seems to encapsulate my thoughts. Sort of:

Once upon a time, I, Zhuangzi, dreamt I was a butterfly, fluttering hither and thither,

to all intents and purposes a butterfly.

I was conscious only of following my fancies as a butterfly,

and was unconscious of my individuality as a man.

Suddenly, I awaked, and there I lay, myself again.

Now I do not know whether I was then a man dreaming I was a butterfly,

or whether I am now a butterfly, dreaming I am a man.

Between a man and a butterfly there is necessarily a barrier.

The transition is called Metempsychosis

He who dreams of drinking wine may weep when morning comes; he who dreams of weeping may in the morning go off to hunt. While he is dreaming he does not know it is a dream, and in his dream he may even try to interpret a dream. Only after he wakes does he know it was a dream. And someday there will be a great awakening when we know that this is all a great dream. Yet the stupid believe they are awake, busily and brightly assuming they understand things, calling this man ruler, that one herdsman ‑ how dense! Confucius and you are both dreaming! And when I say you are dreaming, I am dreaming, too. Words like these will be labeled the Supreme Swindle. Yet, after ten thousand generations, a great sage may appear who will know their meaning, and it will still be as though he appeared with astonishing speed.

Is there going to be a great "awakening"? Is this going to be some Matrix-like revelation? Is this in some way related to the end of the Mayan calendar and the so-called global "consciousness shift" and general spiritual evolution of man that awaits us in 2012? 

I'm fucked if I know, Terry.