This theory of dreaming was first proposed by Allan Hobson and Robert McCarley in 1977. According to the theory of activation synthesis, circuits in the brain are activated during REM sleep. These brain circuits, in turn, help to activate areas of the limbic system. All of this internal activity is synthesized and interpreted by the brain. The signals are then given meaning via dream states.

The most pervasive theory of dreaming is that dreams are a result of electrical impulses in our brains that occur only while we sleep. Allan Hobson and Robert McCarley came up with this theory in 1973, and proposed that the reason why dreams have come to garner so much meaning for people is that our waking minds will give them a narrative. In other words, our actual dreams are not stories; they are instead random memories strung together. When we wake up, we try to make them into stories that make sense to us.

Sigmund Freud is the founder of dream theory. He approached dreams from a psychoanalytic perspective, which posits that most of our actions are the result of repressed feelings and desires. Freud thought these feelings and desires came out unrestricted in our dreams.

Many older civilizations believed that dreams were metaphysical experiences wherein the soul was transported from the body to a completely different realm or spiritual plane.

Physiological theories claim that dreams are a product of neural firing in the brain, which can sometimes, according to some theorists, aid in the process of learning. This is why it is recommended to get good sleep before a test!

Psychological theories claim dreams are a way of processing issues in our lives, founded in Freud's initial dream theory, which posited dreams as ways we process repressed feelings and desires.

There are many who believe dreams are a combination of both theories; they are random, but still serve some purpose.

Stage 4 sleep is referred to as delta sleep, or deep sleep. It is very hard to wake someone in this stage of sleep. Unlike REM sleep, there are no eye or muscle movements. This is the time during which young children may wet their beds and/or experience night terrors.  

Sleep apnea is characterized by pauses or lack of breathing when sleeping. A lack of oxygen to the brain causes a buildup of carbon dioxide in the bloodstream. Accumulated carbon dioxide causes the person to wake up, gasping for air. Normal breathing upon wakefulness will allow normal oxygen flow until the person falls back asleep. Sleep apnea is more common among middle aged and overweight individuals. While genetics play a significant role, those with enlarged tonsils, allergies (which may cause swelling of the throat), sinus problems, or enlarged necks are also at risk of sleep apnea.

Memory is encoded during REM sleep. In the hippocampus, neurons fire four times as opposed to once as a result of ponto-geniculo-occipital (PGO) spikes. Memories from a day's activities and learning are encoded in the hippocampus four times, contributing to long-term memory. Theta waves are also associated with this stage of sleep and contribute to REM's restorative nature.  

REM sleep (or Rapid Eye Movement) is the stage in which dreams occur, because even though the body is essentially paralyzed, this stage is accompanied by intense activity in the brain. 

The term "healthy lifestyle" may be broadly defined from culture to culture. While sleep is healthy and good for the body, too much sleep may also be detrimental, or a sign of severe depression. This answer choice is too broad, and not specific enough in its limitations on sleep, to be accurate.

All the other answers are well known theories about the function of sleep.