Well, that's a very very complicated answer, and I am not sure that I know (or know someone who knows) the answer to that question. It is true, however, that when people are not allowed to dream they are not well rested. Prolonged dream-deprivation results in a variety of problems, mainly dealing with ability to concentrate and perform simple tasks.

There is a dream Institute: (http://home.interlynx.net/~dreambnk/overview/faq.html). They say that "dreaming is common to all mammals. There are many "functions" to dreaming. Simply stated, dreaming allows us to think, feel and play with thoughts and ideas without the constraints of everyday consequences. It is a very creative process." Their theory is that dreaming also helps the growth and formation of thought and language.

I hope this helps!

All "warm-blooded" animals sleep. Marine mammals like whales apparently only have half their brain asleep at a time, allowing them to surface and breathe, then return to sleeping position.We can't say for sure whether non-human animals dream, but their brain wave patterns and eye movements suggest they might. Here's a site that suggests sleeping might help zebra finches (and maybe us) learn: http://whyfiles.news.wisc.edu/shorties/sleep_learn.html

Some people think the brain needs sleep to function properly. See this article for a discussion of that:
http://kz.mlive.com/columns/krasean/0623krasean.html