From what I understand, device failure is a dream sign because we commonly dream about it, yet it doesn't commonly happen in real life. My question is why do we dream about it?

It makes sense that devices would be in our dreams as we deal with them all day - they are common to our reality. TV's, computers, light-switches, phones, watches, etc. Reality is device ridden! I guess another common dream sign is not being able to move, when your legs are tangled up or just stuck in slo-mo. You might call them leg-devices. But I suspect that's something different.

Failure should also be common in our dreams because we encounter it every day. But by the theory that we dream about things in our reality or things on our waking minds, why should we dream our little devices failing when that doesn't happen in reality and is not on our minds?

I'm venturing a guess that our primate heads have adapted to devices but really find them confusing. They're not physical like gathering things, excercising, finding prey. Nor are they social. They're very very new evolution-wise.