I Hear A Symphony

Sometimes, when I'm drifting off to sleep, I imagine music. Music of my own creation.  Sometimes it's even symphonic.  And it sounds pretty good.  Unfortunately, I never am able to remember it later.

So it's got me wondering.  When my brain is in that state, am I naturally more creative?  Or when my brain is in that state, are my critical faculties lower, so I convince myself something sounds better than it is?

A secondary, though perhaps bigger, question.  What is it I'm hearing?  What's going on in my brain while that music is playing?  How similar is it to hearing something from an actual outside source?  (Same questions for seeing something in your mind's eye.)