Why do we dream?
What a cool question! I am sorry to disappoint you, but neurologists and sleep specialists aren't entirely sure why we dream. As a physical process or bodily function, it is hard to say precisely why we have these intense, imaginary situations play out in our minds while we sleep. That being said, we do have a pretty good idea of how dreaming occurs.
Some physicians believe that dreaming is what occurs when the brain is "reviewing" the events of the day and processing memories and emotions. This process of making sense of our daily thoughts, feelings, and experiences conjures up vivid imagery and feelings in the absence of external stimuli.
More specifically, some scientists feel that this process of replaying the day is how our brain sorts through our experiences to decide what to synthesize and integrate into long term memory and what is "junk."
While it is a less exciting explanation, some people feel that dreams don't have any purpose at all and are just a byproduct of other chemical processes that happen while we sleep.