This is a question that I had posed regarding the nature of mental images described by patients who suffer from Charles Bonnet Syndrome here:
When one has a dream it is typically of a place that they have been to, an abstraction of same or of one that does not necessarily 'exist' in the world as we know it. That is to say that though it is an experience that a subject is capable of generating a report about it is nonetheless absent from the world that this report is generated within.
Like the mental images experienced by someone who suffers from CBS as demonstrated in the post above: it seems that there is no locus or coordinate in this world for that experience to manifest. The brain facilitates the emergence of the phenomena but does not contain it. Or simply put: there are no movie theaters that are literally inside of the brain. Let alone a homunculus that is behind the operation of it all. Insofar as can be told anyway.
This proposition is illustrated quite often in the form of a cloud that manifests outside of a persons head with a simulation running within the confines of it. It would be hard to imagine that all that one could ever dream about, day and/or night, would take place within a bubble that stands some odd inches away from the brain. I personally think that this illustration is an approximation of an event that we just do not really understand or know how to fit within the body of knowledge as we have today and thus why it is often conventional to use because all else that we may contemplate, in part, would stem from it. Dreams have been referred to as "counterfactual" and/or "embodied" simulations from psychology to neuroscience.
Is that illustration an accurate representation of what is actually going on? Are dreams "places" like any other place that we are capable of visiting in the world?