I don't know and we might never know. Brain creates the image and watches the image

But in my experience with lucid dreams objects have really high quality textures. You can even feel the bumpiness when you touch them it's mind blowing

I hate to say it but I have an IQ of 130 maybe that's why my dreams are extremely high quality

Only stuff with complex random patterns which you don't see regularly in real life have sections you can't remember. Sometimes those sections are filled with other parts of the object, sometimes they are filled with a generated pattern. These "filled" sections are generally blurry or smudgy

Some experiments I made:

• If you try to "load" a lot of these complex objects world just starts shaking and crashes.
• You don't wake up at morning if the world crashes, you just wake up at the middle of the night. And if you have a smartwatch the sleep graph shows that you jumped from directly REM to Awake, skipping light sleep
• I set up a recording of myself saying "can you hear me inside the dream" to play while I'm in the REM cycle. You can hear the real world inside a dream even when you're not lucid
• When you tell dream characters "you're a part of my dream. You're not real" they panic and scream in fear while running around which "crashes" the dream
• I generally create a "god" which helps me manage the world much easily. One time I asked that "god" to show me a color I've never seen. It was beautiful, kind of close to magenta but words can't describe the beautiful color I saw there (or maybe thats what my brain wants me to think)
• Computers and phones doesn't work. Icons and text look garbled
• Physics are glitchy. Objects fall in fixed speed unlike the real world. There's literally no impact response. Collisions either feel like you hit an immovable object or cussions
• Light is not simulated as individual photons. In other words your brain doesn't have RTX. Reflective objects like mirrors dont work. Turned off screens and cars simply dont reflect anything, they just look either matte or glossy.

I feel like I'm writing a bug report to god lmao

Those are my personal experiences anyways. Idk if everyone's dreams work like that