Yes, we dream every night. But dreams are complicated, and their contents can confound us. It's no wonder so many of us forget a lot of what we dream. Some people even claim that they never dream. But aside from those who have experienced certain kinds of brain injuries, everyone dreams whenever they sleep. It's been estimated that more than 2 hours out of each night's sleep are spent dreaming or in a dreamlike state.
It's long been believed that we only dream during the rapid eye movement, or REM, cycle of sleep. Actually, there's evidence that people dream during non-REM sleep, but the content of these dreams tends to be more mundane and low-key. As we sleep, we pass through one stage then another, from non-REM to REM, then repeat the cycle throughout the night. The time just before we wake tends to be the longest, most active dreaming phase.
The richer, more compelling, or just plain odd dreams seem to occur during the REM cycle, and it's this stage of sleep that the body seems to seek. If you lose REM sleep one night, you'll likely make up for with more REM time the next night, a phenomenon known as REM rebound.
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