I had a dream-within-a-dream-within-a-dream recently, which I remember parts of.
I was having a dream in which several people from my life appeared. My mother and maybe my cousin were among them. Then I woke up from this dream. I told one of these people about the dream, and it turns out they also remembered it. In fact, all the people I told had had the same dream! We all thought this was incredible. I thought about it and then presented my theories: There are only three possibilities, I said. One, we were somehow telepathically linked during sleep. Two, our minds were actually all transported to an alternate world. I fixed my eyes on my mother and continued: Three, this… the present moment… is actually still a dream!
Before I had said the last words of that sentence, we all woke up at the same time, proving the third theory to be correct: we had all been dreaming. The moment of awakening was signaled with a sudden shift in reality: the gloomy and gray room all of a sudden turned bright and colorful. This was the passage from dream to waking. However, the shift didn’t cause anything else to change. My mother was sitting in the same chair; and I was standing in the same spot and even finished my sentence.
After actually waking up, I of course realized that when waking up from a dream, you don’t actually find yourself in the same place and continue doing what you had been doing in the dream. Also, although the theory had been correct inasmuch as it had been a dream, in actuality it had been only my dream, not everybody’s. In fact, this theory was inherently invalid, since you can’t explain a shared dream with another shared dream.