What is a dream?
What I consider a dream to be is a desire. A desire for what you, yourself desire. By now, you are probably thinking that that makes no sense at all, so let me explain. What we see in a dream is normally what we want mentally. Dreams are therefore fufulling your desires of what you don't literally have.
What is a nightmare?
I think that a nightmare is a also a desire, but one that you may not know about. I believe that a nightmare is a mental desire to confront your fears. The nightmare acts as a mental preparation. When you are having nightmares you are essentially facing your fears then you usually wake up shortly after. Generally after you have woken up, you realise that everything is ok. This is where I think we build our mental toughness from our deepest thoughts.
Reality Vs. Dream
How can you tell apart reality from a dream? I think it is nearly impossible to tell if we are in reality or in a dream. Right about now you are probably thinking you are in reality. Think about how your dreams or nightmares end though. When we are in a dream or nightmare, they seem to go on forever, but in reality only a couple seconds has passed. With that in mind think about yourself right now. It feels as if a couple of minutes has passed already. This makes me think if we could be living in a dream right now. Then when we wake up to reality, only a couple of seconds has passed. I do believe that right now, we are in reality because it would be very hard to read/write in a dream.
Another thought that has crossed my mind is what if we are dreaming inside a dream?