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Oftentimes, dreams can be very realistic, to the point where you don't know if you're dreaming or not. And spinning a top, like in "Inception", isn't always an option. So how do you determine that whatever you're experiencing is a dream or reality? What signs do you look for? Do you try to match up whatever you're seeing to the same situation/place/experience you know in your real life? And once you know you're dreaming, how do you react?
To start with my own example... I once dreamed that I was driving on an expressway at night. In the context of the dream, I was in far north suburbs of Chicago, heading southbound. OK, fair enough. But the signs over the expressway pointed to east-west streets in DuPage County (west suburbs). Not only that, the signs were white with black writing, instead of the US standard of green with white writing, and their illumination was much brighter than normal, while the streetlights weren't lit. The trees along the expressway looked very tall, and the lane markings looked weird, too; I don't remember how exactly. And the whole situation had an uneasy, ominous feel to it. That's when I knew I was dreaming, and promptly woke myself up (from within the dream).