I'll be there.

"Why does reality exist?"

I think the problem with this question is the use of the word "why." It is generally either a quest for intentionality (eg. "Why did you do that?) or for earlier steps in a causal chain (eg. Why is the sky blue?). So the only type of answer that could properly answer this question is one that introduced a first cause (which is, of course, a concept rife with problems) or one that supposed intentionality in the universe (like, the universe decided to exist as it is or something equally nonsensical). This is probably (part of) why answering this question with the non-explaination "God did it" feels so satisfactory to some--it supposes intentionality and creates a first cause. It makes you feel sated without ever having explained anything, but the question was a wrong one in the first place, because any answer would necessarily lead to another question, since the crux of the question is that of a causal chain.

I think a better question would be "How does reality exist?" as that seems a lot more likely to be answerable.

I can feel pain in dreams. I'm not sure if I can self-inflict pain in dreams (I've never tried), but I've definitely felt pain in dreams.

I'm not sure if I've experienced sleep paralysis before, but I've had experiences very similar to it. I will "wake up" from a dream without actually waking up. So I will know that I'm in bed, my mind will feel conscious, but my eyes will be closed and I'll be unable to move. Ususally I try to roll around to wake myself up, or to make noise so someone else will notice and wake me up. But it doesn't work, 'cause I can't move or make noise, even though it feels like I am doing those things (and yet I'm aware that I'm not, because I can feel the lack of physical sensation and auditory perceptions). But when I actually wake up and can move, it feels like waking up, rather than just not being paralyzed any more. And sometimes when I'm in that "think I'm awake and can't move" state, I imagine my environment being different than it actually is. Like, I might think I'm awake and in my own bed, and then when I wake up for real, I realize I'm at someone else's place. Which makes me think I wasn't actually awake when I felt like I was. But it feels awfully similar to sleep paralysis, so I'm not sure if it is sleep paralysis or just something very similar.

They usually recommend things like seeing if light switches work normally

Do other people have the same problem I do, then? When I'm dreaming, I often find that it's dark and that light switches don't work. I'm always thinking that the light bulbs are burnt out. It's so frustrating, 'cause I just want to turn on the light and it's like I never can in a dream.

When I dream about being underwater, I can breathe in the dream, but I also am under the impression that I'm holding my breath somehow, even though I'm breathing. Like, I'll "hold my breath" only, I've just made the mental note to do it and not actually done it. But it won't be clear to me in the dream whether or not I'm holding my breath, even though I'm aware that I'm still breathing. It's weird and contradictory, but dreams are capable of being like that. It's like how in a dream, you can see someone and know who they're supposed to be, even though they may look and act nothing like that person they supposedly are. Or how you can be in both the first and third person perspective at the same time.

That's exactly my method too.

Those who dream do not know they dream, but when you wake you know you are awake.

I actually use this fact to enable lucid dreaming. When I'm dreaming, I ask myself, "am I dreaming?" And then I answer yes, without any further consideration, as I've realized that the answer is always yes. Because when I'm awake, I don't ask that question, because there's never any doubt to begin with. So when I'm dreaming and I find myself unsure of whether or not I'm dreaming, I therefore know that I'm dreaming, simply because the doubt and confusion exists. It's a method that's a lot simpler (and more accurate) than trying to analyze the contents of the dream to see if it seems real.

That may be true, but you've given no evidence to support your claim. Can you give some examples?

Well that really depends what the decision is and what the circumstantial factors are. As I said in my last comment, decisions are made by a combination of emotion and reason. Emotions tell you where you want to go, and reason tells you how to get there. Whether or not a decision is reasonable depends on (1) was it an effective (and efficient, though that's somewhat less important) way of achieving your goal? Did it actually produce the outcome desired by your emotions? And (2) was it consistint with reality and the facts? Was the decision based on accurate information?

Taking the example you gave, of a family member being hurt by someone else in an accident, your emotions in reaction to this event are likely to be very charged. You just lost someone that was important to you, and you're bound to feel hurt. It's also very common to feel angry and to want revenge on (or justice for) the person that was responsible. It's not clear to me why the human default is to assign guilt without evaluting the situation first to see whether or not the person actually is guilty, but that does seem to be the common response. In this case, it would be up to a jury to decide whether this constituted manslaughter. It's most probable that the jury, having no vested interests besides ensuring justice, would be able to come to the most rational conclusion.

That said, if you are being truly rational about it and if your emotions are telling you your goal is to find out who (if anyone) was responsible, then your conclusion should be no different than that of the jury's. Of course, most people do allow their emotions to bias them, and aren't rational (thus the need for the jury). But if you are being rational about it, and your goal truly is about discovering the guilt or innocence of the parties involved, then how you feel about the situation is what is motivating your search, and reason and evidence should be what determined your answer. If you really don't have enough evidence, and the evidence you do have doesn't point more in one direction than the other, then yes, the rational conclusion would be simply to admit that you don't know.

One should be careful to inspect what exactly that emotional motivation actually is, if it's to determine guilt or innocence, to learn the truth about the situation, and not to find someone to blame so that you can feel better about it. (Although, how it would make you feel better to condemn a potentially innocent person when it will do nothing to bring back your family member nor help anyone else is a mystery to me. Alas, human beings have a lot of nonsensical intuitions.)

That said, if you're honest about your intentions, and what you really want is to blame someone else, and not to find the truth, and the possibility of blaming someone innocent isn't inconsistent with other explicit or implicit pro-social goals of yours, then to point the finger without basing your conclusion on the examination of the evidence isn't strictly irrational, since it would be consistent with your goals, to which the facts aren't relevant. However, that sort of approach would be pretty anti-social, and I doubt anyone having that goal would be honest enough to admit it. If your stated goal is to find the truth, then the only honest thing to do is look at the evidence, follow it, and be prepared that it might go either way.

It does no good to write in the bottom line before you start if your goal is to find out the truth. You won't arrive at the truth that way, and if your emotions tell you the truth is what you want, then that behavior would be irrational. In the words of Eliezer Yudkowsky, "Your effectiveness as a rationalist is determined by whichever algorithm actually writes the bottom line of your thoughts." I strongly recommend you read Eliezer's posts The Bottom Line as well as Rationalization, as they address the issue you seem to be struggling with.