The Mind in Sleep: Psychology and Psychophysiology mentions dream kinesthesia as a potential suspect. It happens when we lose the physical movements in our sleep as soon as we physically move after waking up (such as when we reach for the alarm clock). Another possibility is that our memories are formed through repetition and finding connections to other parts of our lives. So when dreams are especially unique (read: crazy) or too undefined to be relatable, it’s harder to tie them to real-life events and remember them.
Christof Koch, points out the incongruity between our brains’ being so active during REM sleep (the deep-sleep stage in our sleep cycles) and only vaguely recalling dream details when we awaken.
brain waves that roll through during deep sleep may impede information processing. This is a more scientific approach to the brain-recall conundrum.