She has dreams. Or at least, so I infer, because sometimes while sleeping she starts having rapid eye movements and organized facial twitch movements, like cats do when they go into REM sleep. (I haven't watched any grown-up people's REM sleep, so I can't compare.)

Sometimes she has nightmares. In the middle of her REM sleep, she'll cry out and if I'm quick I can comfort her back to sleep.

Sometimes she has falling dreams, where out of the middle of nowhere she has the startle reflex and flings out her hands and legs to the side. When she's awake I can trigger this by holding her in my extended arms and dropping them quickly through about 2-3 inches; the reflex is a response to a partial sensation of freefall. I can only assume that she's feeling a falling sensation in her sleep.

I'm dreaming more too: since I am sleeping with her most of the time, my sleep is pretty heavily interrupted but as a compensation it's very rich in remembered dreams. Last night I had a dream about being at a dilapidated villa-type resort in Hawaii (or a Hawaii-like place) where the most congenial other guests were a couple of insectivoral vampires. Then the hotel was raided by superheroes... but I digress.