Here is a brief description of Jung’s approach to dreams from Daryl Sharpe’s Jung Lexicon available online at http://www.psychceu.com/jung/sharplexicon.html
Independent, spontaneous manifestations of the unconscious; fragments of involuntary psychic activity just conscious enough to be reproducible in the waking state.
Dreams are neither deliberate nor arbitrary fabrications; they are natural phenomena which are nothing other than what they pretend to be. They do not deceive, they do not lie, they do not distort or disguise. . . . They are invariably seeking to express something that the ego does not know and does not understand.
“Analytical Psychology and Education,” CW 17, par. 189.
In symbolic form, dreams picture the current situation in the psyche from the point of view of the unconscious.
Since the meaning of most dreams is not in accord with the tendencies of the conscious mind but shows peculiar deviations, we must assume that the unconscious, the matrix of dreams, has an independent function. This is what I call the autonomy of the unconscious. The dream not only fails to obey our will but very often stands in flagrant opposition to our conscious intentions.
“On the Nature of Dreams” CW 8, par. 545.
Jung acknowledged that in some cases dreams have a wish-fulfilling and sleep-preserving function (Freud) or reveal an infantile striving for power (Adler), but he focused on their symbolic content and their compensatory role in the self-regulation of the psyche: they reveal aspects of oneself that are not normally conscious, they disclose unconscious motivations operating in relationships and present new points of view in conflict situations.
In this regard there are three possibilities. If the conscious attitude to the life situation is in large degree one-sided, then the dream takes the opposite side. If the conscious has a position fairly near the “middle,” the dream is satisfied with variations. If the conscious attitude is “correct” (adequate), then the dream coincides with and emphasizes this tendency, though without forfeiting its peculiar autonomy.
Ibid., par. 546.
In Jung’s view, a dream is an interior drama.
The whole dream-work is essentially subjective, and a dream is a theatre in which the dreamer is himself the scene, the player, the prompter, the producer, the author, the public, and the critic.
“General Aspects of Dream Psychology” ibid., par. 509.
This conception gives rise to the interpretation of dreams on the subjective level, where the images in them are seen as symbolic representations of elements in the dreamer’s own personality. Interpretation on the objective level refers the images to people and situations in the outside world.
Many dreams have a classic dramatic structure. There is an exposition (place, time and characters), which shows the initial situation of the dreamer. In the second phase there is a development in the plot (action takes place). The third phase brings the culmination or climax (a decisive event occurs). The final phase is the lysis, the result or solution (if any) of the action in the dream.