Acharya Prashant explains that consciousness, by its very nature, is dualistic. Whether in the waking state or the dreaming state, there is always a subject (the 'I') and an object (the world). In the waking state, the 'I' is identified with the surface mind, referred to in Vedanta as 'Vaishvanara', which interacts with the external world. In the dreaming state, the 'I' shifts to a deeper level of the mind, called 'Taijasa', where it experiences an internal world created by the subconscious. Despite these shifts, the duality of the observer and the observed remains constant across both states.