Explanation of the hadith
The Prophet (may Allah's peace and blessings be upon him) explained that one of the worst types of lies is for a person to claim to have seen something, while awake or in his dreams, and he has not actually seen it. Lying about seeing something in a dream is worse than lying about seeing something in wakefulness, because what a person sees while being asleep is from Allah, the Almighty, via the angel if it is a vision. Therefore, lying in this case is considered lying about Allah. As for dreams, they are from the devil, and self-talk comes from the self. So, what the sleeping person sees is one of these three types.