The human brain is responsible for many complex creations, but it can’t invent the image of people. So the “strangers” that you meet in your dreams actually have the faces of people who you’ve once seen in your real life but forgotten, like your childhood mailman or that guy bumped into on the side walk that one time. 

Chances are that you’ve laid their eyes on more than a few individuals, and so the brain as a huge cast of characters to play with when you drift off to sleep. Except for in the case of extreme psychological disorder, every human being dreams. In fact, in a recent study, students who were awakened at the beginning of each dream but still allowed 8 hours of sleep, all experienced difficulty concentrating, irritability, hallucinations, and signs of psychosis in a span of three days. 

When they were allowed their REM sleep, their brains compensated for the lost time by increasing the percentage of the sleep spent in the REM stage. Dreams are a window into the subconscious. Even though most of the time, they’re completely random, disorganized, and we forget 90% of them within 10 minutes of waking up; many people have drawn inspiration from their dreams. Mary Shelly’s Frankenstein was a based on a dream that she had. 

(Source)