The document discusses Sigmund Freud's theories on dream analysis and the processes of dream formation. [1] Freud believed that dreams are formed through condensation, which combines multiple elements from the unconscious into single dream elements, and displacement, which transfers psychological intensity from one element to another. [2] He provides examples of analyzing dreams by noting associations that elements in the dream trigger and linking them to repressed experiences and thoughts in the unconscious. [3] Dream formation involves transference of psychological intensities that distorts the relationship between dream thoughts and dream content.