The first thing to accept is this: The divide between sleep and waking life is permeable, fuzzy. Two cities that occupy the same space.
For example, if you've ever looked at a clock, you will have experienced the odd sensation that the second hand took longer to move when you first looked at it. What's going on there? In the microsecond it took for you to move your head and focus on the clock face, a jumble of blurred images went past your eyes. Your mind had no use for them, so it retroactively edited them out and reinserted the lost millisecond once you had something to focus on. In this case it happened to be a clock, which gave you a reference point. It allowed you to spot the trick. But really, things like this happen all the time without you ever noticing.
The mind is constantly taking shortcuts. We see an object moving toward us and in an instant it is scanned against a database of images. Some key points are noted and we decide it's a car, how fast it's moving, what direction. Complex calculations performed almost instantly, usually with great accuracy. But optical illusions are an example of this mechanism misfiring.
The point of all this is that the mind isn't just an observer. It takes cues from external stimuli but it is constantly interpreting, streamlining, disregarding irrelevant data, filling in gaps and cut-and-pasting over blind spots. It's a reality generating engine. The amount it generates depends on how close we are to a dreaming state, but it is constantly generating.
For the experienced lucid dreamer, dreams can become every bit as vivid, as real, as the world you perceive around you right now.
Most of us have experienced a lucid dream at one point. It's the awareness that you're dreaming, while you are still in the dream. Typically we'll experience a brief moment of excitement, maybe even try flying for a bit, but all too frequently our excitement wakes us up. So you need to learn how to lucid dream more often, and then maintain the dream once you realise you're in it.
Step 1- Cultivating awareness in waking life.
Dreams are an analogue of waking life and our habits and values are reflected in them. So, to be lucid while dreaming we need to become more lucid while awake.
So how do I do that?
The 'reality check' method. In daily life, sporadically "check" if you're dreaming. You might do this by checking the time, looking away, then checking again. If you were dreaming, the numbers would be inconsistent or meaningless. It may seem silly, because you intuitively know when you're awake, but building the habit is what is important.
While using the reality check on a regular basis, we can then try and induce lucid dreams directly.
Step 2- The wake/back-to-sleep method.
Set your alarm for two hours earlier than you would normally wake up. So if you need to be up at eight, set it for six. Then, when it wakes you, stay awake for 30 minutes. Then, go back to sleep with the intention of having a lucid dream.
It's a good idea to use that time to write down what you intend to dream about.
This method works by starving your mind of REM sleep, so that it increases the duration of the REM state in the following half hour. This has probably happened to you by accident before. Think about when you naturally woke up earlier than necessary, went back to sleep and had some of your most batshit mental dreams. The difference here is that you're waking yourself up on purpose then going back to sleep with the intention to lucid dream.
It may take practice over a couple of weeks but you should eventually be able to induce lucid dreams at least some of the time.
So you're lucid dreaming, now what?
Step 4- Maintaining the dream state
It's common to become over excited in a lucid dream and wake yourself up. There are some weirdly specific methods that seem to help with this. Some suggest looking at your hands in the dream as a method for calming and refocusing the mind.
Again this may take practice but over time you should be able to calmly realise that you're in the dream and then maintain that state.
At which point you can start to have some real fun.
Step 5- Do what you want to do
There are some obvious options I don't really have to detail here. Indulging your every hedonistic fantasy will probably keep you busy for a while, depending on how imaginative you are. But when you've exhausted that depraved stockpile, you might try a more spiritual route.
One particular lucid dreamer told me about a series of dreams he had where he gradually built a control room within his mind. A sort of observation deck (which in retrospect sounds eerily similar to the one in the Pixar movie Inside/Out, although this conversation took place years ago).
Eventually, a voice within the observation deck said, "what do you want?"
And he responded: "Show me something I've never seen before."
I don't want to tell you what his mind showed him, because it might skew your own version. Plus it's not the point. The point is to use lucid dreaming to plug into a deeper part of your mind, a part that's usually inaccessible in waking life.
This is the real magic of lucid dreams. There's a person inside you who is much smarter than you. That person is where all your best ideas, all your bursts of inspiration come from. You just don't have access to them most of the time, at least not in any way you can control. As flaky and new age as it sounds, lucid dreaming is your chance to spend more time with that person.