Take the musical instruments a musician is familiar with. They often can hear things in a song the average person who doesn't play those instruments is unaware of. — Marchesk
A dream could function just like the way music rejigs our time perception. Each instrument has a different flow of time. The emotional tone of a dream can be played at a different rate to the thoughts behind a dream. We continuously forget what we intended to do where our dream character moves around and is forced to create new intentions based on the changing locations of the dream. For example a dream character might go to the shop to buy a specific item but it will be forgotten by the time he arrives. Then the dream character must form a new plan based on his current surroundings in the shop. Perhaps he might decide to explore outside. So new plans would be created impromptu. We aren't making new decisions from scratch but instead we're basing them on the changing scenery around us. In a dream we're amnesiac not only about our past selves but also our past ambitions. This is what contributes to effortless story-making. Amnesia in real-life might cause apathy, blankness, confusion or meditation on the present moment whereas amnesia in a dream somehow results in chaotic narratives. One way to explain the mismatch is that we're selectively amnesiac in a dream where our thoughts and emotions diverge. Specific thoughts are erased from a dream character's memory. We're partially amnesiac in a dream rather than being completely memoryless and so the amnesia in a dream is more multi-layered than medical amnesia.
"The spatial and temporal dimensions of music are actually quite separate from the space and time as we encounter them in normal experience. So it's a curious thing that you can write music out and then when pitch goes up you write the notes going up and down and so on. But in fact of course the notes being written are spatially going up and down but the musical notes are not. The tones are not. One way of putting this to say music has its own space and similarly with time. You take a piece of music and you start at 10 a.m - let's say you finish it at 10:15 - and then you think oh I really like that so you play it again. You started at 10:20. Now the start of it in the world of experience is a different time but the start of the piece is the start of the piece. So the temporal relations - start middle finish - and so on plus more sophisticated things like reprise and recapitulation and variations these are all within music" (4:29-5:42)
Gordon Graham - What is Philosophy of Art? - Closer To Truth
"Author defined time as an objective time of the musical composition and the subjective time as psychological experience. Accordingly, absolute time is organized within the composition – it is objective and defined, thus can be expressed in size by the properties, values and symbols of musical elements, notation and timing. Musical time as the psychological phenomena is relative referring to the organization of time in performer's mind, as well as how the performance is perceived and experienced by listeners. The nature of organization of elements of musical time in the performer's mind lies in the conception of the structure of the temporal organization generated by the performer's subjective expression, knowledge of the musical form, and motor/kinesthetic ability. Furthermore, the idea of the temporal structure also incorporates experience and practice, as well as intuition and aesthetic valuations. Thus, the structure of time is not independent – it interacts and relies upon other structures, building performer's conception of the whole."