Isn't all this the Cartesian evil genius question of your namesake?

Yes

Material reality forms the basis of our experiencing dreams. There's nothing completely foreign in our dreams. This isn't to say that what transpires in dreams cannot be unintelligible, but they're always grounded in this world.

The question is why are there two states of being?

Material reality forms the basis of our experiencing dreams. — Heister Eggcart

If your life is a continuous dream then it's the other way around: dreams form the basis of your idea of 'material reality'.

So your assertion begs the question against dreaming skepticism.

Explain.

Material reality forms the basis of our experiencing dreams — Heister Eggcart

Material reality is susceptible to what we sense "materiality" is. At microscopic level we are not sure what materiality is. While dreaming, I think all stuff I see is true and concrete, but we know it turns out that a dream is an "illusion" and it fades out. Taking this into view, when we're dreaming we don't question ourselves "are these things really physical?", since we are seeing them there as we normally do. It's the same with our reality: if we live just seeing a map of it, we never really look into reality even being trapped at it, just like when we are into a dream without realizing it. It means that observation is the key to understand and it is just possible with our senses. And to use our senses, we must know ourselves first.

If your life is a continuous dream then it's the other way around: dreams form the basis of your idea of 'material reality'. — lambda

Like prisoners that only know shadows produced by forms: they'll suppose the shadows are the truth and not the other way around.

For people for whom their dreams seem just like what they consider their waking phenomenal experience, this must surely be confusing, and I'm not sure what the solution to the problem would be for them.

For me, however, my dreams don't at all seem just like my waking phenomenal experience. My dreams are completely qualitatively different than my waking experience, and when I'm dreaming, I almost always know that I'm dreaming.

My dreams have more the character of "free movies that I'm imagining." They're more or less similar to daydreams--which don't at all qualitatively seem like veridical experience to me. It's just that when I'm sleeping and I do the "daydream" thing, I can do it a lot more elaborately--more complete storylines, more details, etc. That's probably because perceptual and other mental phenomena are not interferring.

For people for whom their dreams seem just like what they consider their waking phenomenal experience, this must surely be confusing, and I'm not sure what the solution to the problem would be for them. — Terrapin Station

Indeed. The mind seems to be wandering to nowhere when we don't get what kind of experience we're going through and why. However imagining good things and being aware of the dreamlike condition does not mean that you've found the purpose of being 'dreaming', but rather that you are not subjected anymore to sensations as they reach you, because you've stopped reacting and understood it, and once we cross the line we learn the difference jumping out of the 'action and reaction' effect.

The same goes to reality: people allegedly can sense it differently by stopping reacting and by starting being aware of other senses.

If you want to share how you've unlocked your perception to realize while you dreaming, maybe through a technique, please share. However, be aware that I won't understand right away... learning takes time and every person has its own. We can point the truth to a blindman with our fingers, and he will be able to see it right away, but not the opposite I think.