Hi there, thank you for your question and the follow up information. I'd like to give you some basic background information before diving into your question on sleep, which you may or may not already be familiar with.
Basically, there are different cycles of sleep, including the rapid eye movement, or REM cycle. Dreaming occurs in different parts of the cycles of sleep, and how clearly you remember your dreams also depends on your level of consciousness.
Some thing I would particularly like to explore is how clearly you remember these dreams, basically, are they pretty vivid, or more fuzzy around the edges? I'm guessing from your details you provided in the question that they are more vivid, as you said sometimes you get confused or lose touch with reality because of the dreams.
One thing I encourage you to do outside of exploring this through therapy is seeing a primary care doctor or a possible sleep specialist to make sure there is nothing physical going on at this time. They may even recommend a sleep study, which can sometimes be done in your own home nowadays with the technology that has been developed.
Another important aspect of what is going on is the contents and or details of the dreams. Since you used the word dreams, and not nightmares, I'm hoping that the content is not too disturbing for you. If the content is disturbing, I also encourage you to talk to a primary care doctor or psychiatrist about medication options for nightmares.
There are non-medical ways of dealing with the dreams, such as writing out what you remember and completing the dream in a way that you wish it would've been in your sleep. Basically, rewriting the dream to have the outcome that you would like.
I also think it's important to examine how often you are sleeping, because if you are constantly dreaming when you are sleeping you may not be going deep enough into the different cycles to get enough rest. I encourage you to keep a sleep diary, and also try to practice good sleep hygiene. This involves things that you have likely heard before come out like falling asleep and getting up at the same time every day, keeping napping and caffeine to a minimum, and getting regular exercise if it all possible.
Thank you for your time and your question, good luck and take care.