The way I always thought about it is that in daily life you're living through your interpretations from information gained from sensory organs. These organs are no where near perfect so you won't be getting quality information. While you're asleep there is no information being gotten from those organs, it's all created directly in your mind, so the quality can be much better as a result.

I haven't found emotions to really be stronger in dreams/lucid dreams though. Mostly when I'm in a dream everything just feels super crisp and perfect.