The Sleep State:
The dream state is just another form of consciousness. The brain takes in more than most will give it credit for. For instance, walking down a street we see ground, buildings, sky etc, this, for the most part, is what we consciously perceive, while simultaneously the brain is registering, light and temperature(if they arent affecting us enough to otherwise notice) texture and all sorts of other things we more than likely are consciously neglecting to acknowledge.
While sleep serves practical purposes such as regenerating the body, it also does the dreaming. Technically speaking no-one is %100 sure of why we dream but popular belief aided by psychology has determined that is more than likely the sub-conscious' way of dealing with issues we otherwise wouldn't. Through study it has also been determines that there are five distinct phases of the sleep state and through further study they will undoubtedly find more but here we are.
This phase is when a person is down, drifting in and out of sleep(like when the eyes get heavy and they stay closed longer and longer between each open) where the slightest of disturbances will cause a person to jerk back into reality.
This phase occurs just after a person has fallen into a stable sleep but are still alert to outside disturbance and are still fairly easily awoken.
This is when we are in a decent sleep state and are not so easily awoken.
Phase 4 is really a phase of its own as such but still counts. Phase four is just going back in reverse through the previous stages of sleep (3, 2, 1)
Funnily enough phase five occurs right after we return to around phase one where we are in the lightest of sleeps, but instead of waking here, we usually enter phase five. R.E.M or rapid eye movement, it is believed that this is when the dreaming occurs. Research shows that during R.E.M some of the body's muscles are somewhat paralyzed. It is believed to be a fail safe of sorts for the more intense of dreams so we don't flail about and damage ourselves too much. It is however, possible to dream outside of the R.E.M cycle it is also believed the dreams here are of lesser quality
It is also shown by studies that the entire cycle(from Phase 1-4 and back to 5) takes approximately 90-100 minutes on average and the cycle is repeated several times before waking. Though this all depends on the person and whether or not they have sleeping difficulties.
Historically there are several important figures in dream interpretation Sigmund Freud, those ye old Gypsy interpreters, Artemidorus Daldianus there's more but no need going into it. What is meant by this is that all these people both shared some ideals on the subject such as the symbolic nature of dreams, and they also had their own ideas about what they meant, all may have made sense in some form, but my point will soon be made.
Interpreting your own dreams:
I've always said that the best person to interpret your dreams is in fact, you yourself. My reasoning behind this is because no-one should understand how you think better than you do. There are literally hundreds of books out there available on dream interpretation and some boast that they come with over 1000 meanings for the various images that can appear within ones dreams, I don't really care if a person uses these but you know, a blue rabbit doing back flips would mean different things to different people, like it could represent a need for stability too one person. While the next it could make them realised that their pet rabbit is depressed and needs some attention or something. So I think the use of these books should be limited to only helping you to get the damn brain thinking for itself. For instance, I open my dream interpretation book to a random page, pick a random thingy. And where do I land, on peas, a vegetable I'm sure all are familiar with. Its interpretation as follows "A dream denoting success in business", now comes the question how can a dream about peas be anything relating to success (unless you're a farmer and there is an entire healthy field full I'm not too sure) another random example, apparently a dream of knitting foretells of malicious gossip, interesting enough. Now I hope my point of using these books is understood.
A very important thing most of these books seem to lack is feelings, thoughts and memories and such that occur within a dream. Reflect on a dream you remember quite well, did you feel certain ways at certain times (you probably did), were you thinking or saying anything (again, this is very possible), and did you remember people or places, I don't know about everyone else, but within my dreams sometimes, I will see people or places I know, but they will be 100% different, but I still know them to be the same, note the word "know". What you "know" within a dream is very important because it can be very different from what you are seeing.
Now as far as symbols within dreams go, you will undoubtedly see them, but what do they mean, as I said above, you are the best to answer that, which I am hoping is emphasized by the quotes from the dream interpretation book I used.
Interpreting dreams isn't as easy as many would think, but once you have an idea of what to notice it will make it a lot easier. First thing you should do is write it down, as detailed as your memory will allow, equipped with feelings, thoughts, scenery description or whatever. Now think, did this dream have a focus, a central theme if you will, importantly with dreams you have to "feel" your way around. Were there people you know there? Were they acting like they usually would? If not, how were they acting? Was that particular person there for any reason? Places, have you been here before? Are you familiar with the place are you comfortable here, uneasy or what? This is all important to understanding the nature of your dream, this may all seem a bit daunting but it's not really because within your own mind you already know all these answers, whether you are consciously aware or not.
I am in a house, I'm on the top floor looking out the window onto the ground, it is pitch black and I am terrified out of my brain, I don't know why, but I am already on my down there, every step I take I can hear my heart beat but I get to where a door should be but there isn't one, I see my mum and my grandmother playing a drinking game with a clown they don't notice me, but this doesn't bother me at all, actually I am quite glad they didn't notice me I get outside, but the sun is out my son and daughter (which I don't have in real life but I do in this dream) are playing marbles on the ground and they tell me its wrong to stare at them through the window. I look up at the window and to my obvious shock, I am there staring at the three of us, im quite scared now because obviously there are two of me, and the one up at the window is staring and here I wake up.
Ok, now that may seem like some stange extract from a horror story, but I actually made it up just now.
Ok like I said above, my basic tools too dream interpretation, and since this is my dream I know best how to interpret it and what the surreal crap means. Ok lets break it down
Was there a focus? I would say it was how I saw things, like how I was up at the window and everything was dark and as soon as I stepped outside it was light and I was still up at the window looking down. What does this mean, it may become clear as the interpretation progresses.
Now that the focus was determined(not there will not always be one) we can continue.
-Down the stairs there was the strange drinking game with the clown, as far as I'm concerned the presence of a clown meant nothing aside from my brain is weird, but what is important here is that they didn't notice me and I was happy about this, what does this mean, I think it means that I am happy to be able to slip through the shadows without being noticed (obvious maybe)
-Now we are outside and its light, and I am still up In the window, I'm scared now, but why? Because im both up there an down here, but remember the one up there can't see whats down there, but was also strongly compelled to go down there and I got out there, what I interpret that as is a need to leave my "hermit" like qualities and go outside because dark me couldn't see what was down there, but longed too anyway, with careful analysis you can tell this by how I said it and the emotion portrayed.
I hope that helps, I know I looped around a lot but I feel it necessary, the important thing I wanted to stress was that you take notice of as much as possible because even little things can mean a lot.
Now as for interpreting for others its basically the same process but a little different. If you are seeing it written or hearing it spoken, the person will often, without realising focus on the parts necessary, such as the focus, the feelings, and such. But the beauty of doing this for others is you can make them think so much by asking them questions, such as why were they where they were? Its gets them thinking and amazingly they can usually answer these because within their own mind they already know, like I said before. If the person can't interpret for themselves its good if you are friends with them because you may know to an extent how they think making interpretation easier. But what is important is that you don't really tell them what means what, you suggest such things and see how they take too them, it makes them think and they may go "huh, what are you on" or "hmm, that makes a certain kind of sense".
Have it known that the above is of my own devising and that the methods are of my own creation and could very well be similar to the views of others but that's life, except for the top section which isn't my personal division but actual fact (as far as can be determined) and used as means to help understand my ramblings. Also it is my belief that not all dreams are worthy of interpretation and such, sometimes the brain just need to funnel out all the crap, and this may take the form of 10ft. Tall cats changing light bulbs or whatever, but how does one determine what's worthy of interpretation or not, well you do the same as the rest, if it feels like it means something of importance, that usually it does.
I hope this helps with dream interpretation because like I said, there are plenty of books that contain hundreds upon hundreds of symbol meanings, but there are more to dreams than symbols and I have never found satisfactory info on understanding things so I hope that my writings here have helped you understand dreaming and not confused you more. If you have any question please feel free to ask and I will do my best to answer.