There is a continuum that moves from complete dream-obliviousness (not being aware one has dreamed upon waking) all the way up to comprehensively lucid dreaming, where a dreamer is able to create and control their dream environment at will and then retain an accurate memory upon waking.

There are obvious problems with the self-reporting of dreams and dream recall, so the exact definitions of the continuum are fuzzy, but I'm not aware of anyone seriously disputing the continuum exists.

Also making matters more interesting is the mechanics of dreaming in terms of what frames of reference the brain uses to create the imagery of the dream. It's not surprising that people dream about places similar to their environments if we think about terms of raw data in the brain as it dreams.

At age 17 I had the common experience of dreaming of my recently deceased mother, but my brain didn't take long to realize that seeing her was not possible, and I realized it was a dream. For some years I kept that ability to quickly see the inconsistencies in the dream world, but as of now my asleep brain is back to normal gullibility. Because I have a strong preference for living in the real world, I very strongly (verbally, actually) forbade my mind from showing me my dead mother again, and it obeyed.