I am currently considering the prospect of sleeping and dreaming for characters in Project Vex. A character would have a fatigue effect which would make all of their capacities (like endurance) either fill slower, or cap out at lower values until they rest.
The character would be sleeping in real time, the duration of which depending upon how much the character needs. The real time analog of this would be dependent upon how many in game hours equal a real time hour.
While resting a character will bee especially vulnerable, so it would behoove the players to secure a safe spot for their characters to rest. This promotes developing the character's resources and community, which will help the game flourish.
When the character rests, the psyche of the character travels to the "plane" of dreams. What the character encounters there depends upon a few factors. The main factor is what the character has experienced, as those things most recently experienced will be most prominent in their dream. Those experiences which occur most often will also be strongest.
This also opens up the creation of interesting dream-tweaking abilities, such as lucid dreaming, and traveling into the dreams of others, and more.
Experiences had in the dream will add to the character, even if they are merely phantasms of their waking reality. Additionally, anything that happens in the dream will not adversely effect the character physically, although a character CAN be harmed physically if someone or something stumbles upon their sleeping physical body.
There are many possibile avenues to go with this, including creating abilities that allow a character to forego sleep, or sleep indefinitely.