I have posted something on this topic before.
Perhaps this and that add some explanation to the paper you linked. I don’t think that it is that crazy or random.
This:
“The hippocampus/EC structures are tuned for one-shot episodic memory; the cortex is tuned for slower Hebbian learning.”
and that:
“What is the episodic part of our neural mechanism supposed to make of our mental furniture being shifted around and modified while these little bits of new learning is being consolidated? Perceiving these recalled patterns as they are being recalled and reinforced is what we call “dreaming.”
Feel free to post comments on the linked thread or here, based on the content of the post.