Answered by Sayyidi Habib Umar bin Hafiz (may Allah protect him and benefit us by him)
How can we understand seeing the Prophet ﷺ in a waking state?
There is no real difference between seeing the Prophet ﷺ in a dream state and a waking state in the sight of Allah. When a person’s soul is purified, they may see in a waking state what they would normally see in a dream state. They see with their physical sight (basar) what only the inner sight (basirah) would normally see. It makes more sense that someone sees when their eyes are open than when their eyes are closed. However, due to the thickness of the veils that most people experience, it is only when the soul is free from the body when it is asleep that most people see things.