There are some people that talk about sensual hallucinations, but not sure that is real.

To me this happens in dreams but can be muscle twitches or other phenomena. The mind can integrate these sensations into the dream so they appear to be real. Your dog knows nothing is happening. If there was anything in the room your dog would be going nuts.

Go back to sleep and say good bye to an old friend once again. Grieving is a long process.