Nope you are mistaken, a chemical reaction in your enzymes called IH0 creates an illusion based on your desire. If your desire is so strong your dream will feel realistic.It's because they are your memories getting deleted by the dream. And the process of doing so is the dream, ya get me?
If your IH0 level increases beyond your limit you will be able to have some control or total control of your dream (lucid dream)
If you can't remember your dream it's because your IH0 is low.
hope that helps.