When most of us fall asleep, the brain network that involves attention to the outside world (the working memory network consisting primarily of the lateral frontal and parietal cortices) deactivates and our default brain network (medial prefrontal and posterior cingulate cortices) takes over. The discovery of the default brain network is important, as it involves various aspects of our self, such as our self-representations, dreams, imagination, current concerns, autobiographical memory and perspective-taking ability. Those with higher default network activity during rest have a tendency to daydream more frequently, which makes sense if one thinks of the default network as involving our inner stream of consciousness.
When most of us awaken, our working memory brain network re-engages, and our default brain network recedes into the background. In most people, the working memory network and the default network "anticorrelate" with each other, meaning that when one network is activated, the other is deactivated. This is generally a good thing! Proper connectivity (i.e., communication) between the two networks allows people to know when it's important to distinguish between pure fantasy (their inner stream of consciousness) and "reality" (the external world).
But that's most people. Creative folks and those with schizophrenia tend to have an overactive default network. Prior research has suggested that the thing that seems to differentiate creative but functional individuals from those in a mental institution is that the functional folks appear to have the ability to engage both brain networks, and they can use their working memory network to control their attention. Those who lose grip on reality and become paranoid and delusional have let the floodgates down, so to speak, letting too much of their default network control their attention.