When your eyes are closed, you are generally not able to perceive the external world, and your brain relies on internal mental processes to create experiences. During sleep, when dreaming occurs, your brain generates vivid and immersive experiences even though your eyes are closed.
In many cases, people do not realize they are dreaming while the dream is ongoing. This phenomenon is known as "dream consciousness," where your mind accepts the dream reality as real without questioning its authenticity. This lack of awareness during a dream is called "dream amnesia."
However, some individuals practice lucid dreaming, a state in which they become aware that they are dreaming while the dream is still in progress. Lucid dreaming allows you to have some level of control over the dream narrative, characters, and actions. In lucid dreams, you may be able to recognize that you are dreaming, even with your eyes closed, and actively engage with the dream world.
Lucid dreaming is a skill that can be developed through various techniques, such as reality checks (habitually questioning whether you are dreaming or awake during your waking hours) and keeping a dream journal to enhance dream recall and recognition patterns. With enough practice, some people can become proficient in lucid dreaming and experience heightened self-awareness within their dreams, even when their eyes are closed.