Material world we live in is also not real like our dreams!

 During sleep we dream as well.

Vedanta -Next to the active(awake) state is the dream state, which occurs before the state of deep sleep(sushupti). 

During the active state, 5 senses & the mind is active. Intellect decides.

Dream state of sleep - mind works with stored impressions of desires fulfilled & unfulfilled. Intellect & 5 senses are not working. Atma observes subtle body moving around! 

Nightmares seems so real & scary but on waking up I know it was not real, I was dreaming. Not scared anymore.

So, active state is also probably a dream!!!

Nightmares are scary but on waking up we don't feel scared anymore! Similarly the real world around us is also an imagination! We just need to wake up by knowing who we really are! Then we will realise that everything around us is Brahman (God). We are that!