No, more like your mind is trying to dream, but is VERY open to suggestion form the waking world. So any noise/smells/awareness-f-your-surroundings will affect the dream, as will any subconscious reactions to the scene you visualize.

So for instance sleeping the the classroom....
You hear the noises of the classroom - the teacher talking, classmates chatting, pencils writing, etc. So your brain simply overlaps the scene into your subconscious. Now you're "dreaming" that you're in the classroom. This is fine until you mishear (or only partially hear) what the teacher says, so your subconscious tries to translate or fill in the blanks. But the subconscious always gets it wrong, so that['s when the weird things happen. Your waking mind goes "Wait, that isn't right at all" and tries to force you to wake up. When you don't wake up, it basically starts over from the beginning of this paragraph.