The purpose of dream-telling is to determine any emotions a person might be feeling that the person does not realize and get rid of them.
Jonas’s community has two rituals related to feelings. There is the telling of feelings every night and the telling of dreams every morning. Both rituals take place with the family, and are designed to teach children to dismiss their feelings. Since most adults are in family units for the majority of their adult life, they serve the purpose of doing the same thing for them.
The dream telling ritual is described by Jonas in the beginning of the book. Each family member describes a dream in detail and then they discuss what it might mean, and then thank the family member for the dream.
They all listened carefully and discussed with Lily the warning that the dream had given. (Ch. 5)
We learn that Jonas rarely dreams, and that dream-telling begins with Threes. They take it seriously. The purpose seems to be to see how the person feels about the dream, to determine the lesson from the dream, and if there are any feelings from the dream to deal with them right away.
An example of this is when Jonas does have a dream, about Fiona, after helping out in the House of the Old.
"Can you describe the strongest feeling in your dream, son?" Father asked.
Jonas thought about it. The details were murky and vague. But the feelings were clear, and flooded him again now as he thought. "The wanting," he said. (Ch. 5)
The dream is revealed to be the first sign of stirrings, or hormonal feelings. Since these are not allowed in a community with tight population control, Jonas has to take pills. Stirrings also might lead to love, and love is a major risk because it is the strongest feeling of all.
Jonas rarely dreams, but once his training begins he is prohibited from dream telling. The Elders do not want to take the risk that his training will affect anyone else. It is probably a good idea. Jonas begins to feel for real emotions, including love, and even stops taking the stirrings pills. He wants to feel real emotions all of the time.