A simple question without a simple answer.
IMAO there is no question that dreams are both vital and significant.

Post traumatic stress syndrome is characterized by horrible nightmares. This could point to one important function of dreams being to 'digest' our conscious experience.
Through dreams, sufferers of traumatic stress attempt to weave horrors previously witnessed or committed into their lives, but these acts are too at odds to be reconciled with who they are as human beings. Nightmares are repeated failed attempts made by the unconscious to integrate the experience.

Usually dreams are dismissed as meaningless nonsense. It is arrogance on the part of conscious awareness not to give recognition and attention to something that's clearly a part of human existence simply because it's not part of our waking modality.

Thank you @nitesh9 for such a thorough post and for focusing attention on a badly undervalued and important part of life.