From Google I find that this is a line from a poem by Edgar Allan Poe,
http://www.poetryfoundation.org/poem/237388 , "A Dream Within A Dream." It is very poetic language and I'm not sure I understand it. As another poet, Archibald MacLeish said, "A poem should not mean, but be.",
"A dream within a dream" refers to something that has literally happened to me. Has it happened to you? In my dream, I dream that I have fallen asleep and am dreaming. I then dream that I have woken up--into the first dream.
When I finally wake up, naturally, it makes me wonder: "HAVE I really woken up this time? Or have I just emerged into another dream? How many dreams-within-dreams are there?"
Perceptual psychology teaches us that the seemingly stable "real world" we live in is, in fact, a sort of elaborate illusion constructed with a lot of work by the brain. Philosophers have long debated on how we know what is real and what is imagined. Chuang Chou wrote "Now I do not know whether I was then a man dreaming I was a butterfly, or whether I am now a butterfly, dreaming I am a man."