Highly recommended paper on dreaming and surrealism: André Breton and The Politics of Dream: Surrealism in Paris, ca. 1918–1924.

 
The use of dreams in surrealism is described in the paper André Breton and The Politics of Dream: Surrealism in Paris, ca. 1918–1924, by JACK J. SPECTOR (1989), in American Imago, Vol. 46, No. 4 (Winter 1989), pp. 287-317. The link here is to the first page but access to an academic library is needed for the full paper.
https://www.jstor.org/stable/26303837?seq=1#page_scan_tab_contents
 
The paper describes how surrealists recorded their dreams, publishing them in surrealist magazines, even having public performances, termed séances, in which a person falling asleep spoke of their thoughts, images and dreams to the audience. The interest in dreams helped to counter the influence of a modern life that was supposedly rational but which had led to the First World War. It was important to the surrealists for dream accounts to be verbatim, so that they were not stylised or made literary. In the First Surrealist Manifesto, the head of the movement, André Breton, who was a psychiatrist and poet, praised Freud for his work on dreams, and stated that surrealism was grounded in associations and the ‘disinterested play of thought.’ The paper recounts many dreams of André Breton and relates these to happenings within the surrealist movement. For example, one dream from the magazine La Révolution Surréalist in 1924 is of a moveable urinal at a railway station, followed by a flying urinal which the dreamer thought was dangerous, a reference here to Duchamp’s use of a urinal in the ready-made Fountain, in 1917. The dreams of Breton in the paper include many of the leading surrealists, such as Picasso, and the ghost of Apollinaire, who had died in 1918 and had coined the word surrealism in his 1917 play The Breasts of Tiresias. In another dream Breton is in a funeral procession which, to his surprise, is going in the opposite direction to the cemetery. He finds himself abreast of the hearse. ‘On the coffin sits an older man, extremely pale, in deep mourning and wearing a top hat, who can be none other than the dead man who, turning alternately left and right, returns the greetings of the passers-by. The procession enters into a match factory.’
This is a fascinating paper in which the author described the importance of dreams to surrealism, and relates the dreams of André Breton to what was occurring in the surrealism movement and its members at the time.