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hypnagogic imagery
hypnagogic imagery is when you awake to hallucinate imagery that isnt there. the person experiencing it may appear to be fully awake but brain waves suggest they are sleeping.my most vivid experience was seeing and old woman stabbing herself with a knife outside my window, at first i thought wtf? but i blinked and she faded away.
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I've not seen anything dynamic, but I once woke up in a very dreamy state, and my eyes are open but my visual sense is still in dream mode. It reinterpreted my view of the bedroom into a totally different scene.
I think you can also get something where your eyes are half open and you can see the real world, but the rest of your field of vision is a dream world.
On a terminological note: more often people use "hypnagogic" for images that occur while falling asleep; eyes closed, but not full dreaming. E.g. flashing lights or something.
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Hypnopompic imagery is what the author is talking about (because it's the visions you see when waking). I've only had it once while my eyes were open. A tiny cowboy riding a velociraptor was scaling the side of my computer desk. XD