The question of whether we are living in a dream or reality has been a philosophical puzzle for centuries. One way that philosophers have tried to dispel such worries is by appealing to differences between the dream world and the waking one. For instance, our waking world has a coherence that the dream world often lacks. You may recall that in the feature film Inception, the characters learn to recognize that they’re dreaming by asking themselves how they came to be in a certain situation, then realizing that they can’t remember because the dream just dropped them there. But does the coherence of our waking world guarantee that it’s real? I believe the coherence of our waking world does give us evidence that it is not merely a figment of our imagination. Specifically, it gives us evidence that when we are awake, something is causing our experience that is independent of the experience itself. For instance, the relative permanence of the objects and environments we experience in waking life would appear to be best explained by there being something real and enduring that our experiences are reflecting¹.

Another way to determine if you’re dreaming or not is by performing a series of what are known as “reality check tests”. If you are dreaming, things won’t be as they seem normally. Reality checks form a regular part of lucid dreaming and are a means by which you can be actively more involved in your lucid dreaming³.

Depersonalization-derealization disorder occurs when you persistently or repeatedly have the feeling that you’re observing yourself from outside your body or you have a sense that things around you aren’t real, or both⁴. 

I hope this helps!

Source: Conversation with Bing, 8/10/2023

(1) Is Life a Dream? | Psychology Today. https://www.psychologytoday.com/us/blog/mysteries-consciousness/201907/is-life-dream.

(2) How to Tell if You’re Dreaming: 13 Steps (with Pictures) – wikiHow. https://www.wikihow.com/Tell-if-You%27re-Dreaming.

(3) Depersonalization-derealization disorder – Symptoms and causes. https://www.mayoclinic.org/diseases-conditions/depersonalization-derealization-disorder/symptoms-causes/syc-20352911.

(4) Can You Confuse Lucid Dreams with Reality? – World of Lucid Dreaming. https://www.world-of-lucid-dreaming.com/can-you-confuse-lucid-dreams-with-reality.html.