I can tell you what I know:
Dreams organize your brain. Sort, file, and associate your learned experiences. I read this, and see no reason to dispute it. Dream deprivation
also makes people go off-tilt, mentally. I've experienced this personally through experiment. Dream deprivation makes me a zombie.
Dreams can tell your conscious mind things about the body that the conscious isn't normally privy too: Such as reports from autonomic functions.
Dreams are like "BIOS calls" to the inner workings in the body. Case: My dreams told me my teeth were going bad. They seemed fine. Later, they
began to disintegrate due to diabetes. I was surprised to find that my dreams were warning me correctly, yet I had ignored them. :\
Dreams will show you the "future", but not every future that is shown comes to pass. I'm fairly sure I know how I will die, but not when. I've
had enough events "reenact", but not all that fit the criteria of a proper "vision" have, and time has passed too far for the others to be
viable.
Dreams let you communicate with loved ones. I just don't know if there's any real shared communication going on. It tends to feel rather
"One-sided" on my part. I've had no way to verify this.
Dreams can be SHARED (corroborated enough to satisfy myself), and INVADED (corroborated so much I find it a game).
So what ARE they?
"The ability to bring usually unreachable data in to the waking consciousness."
Finally: The only dream experiment that I've done that holds up to the REPEATED rigors of scientific measure and scrutiny is "dream invasion".
Its repeatable, and independently observable due to the sleepers reactions. But the only triggers I know are comfort and discomfort, and honestly:
regardless of how cool it was to verify, the thoughts required to incite discomfort still made me feel bad.
But that doesn't mean I won't do it again. Its as if you could levitate stuff with your mind by hurting people. You'd have to keep secretly doing
it to keep proving to yourself that yesterday wasn't a fluke, and that its real.