Dreams

Dreams: we all have them. Some of them are wonderful-fantasies of power, happiness, and joy. Others are terrible- nightmares of death, fear, and agony.

Sometimes one wakes up in a daze, unsure of whether or not what just happened was a dream... unsure of whether or not what happened was reality, or if waking is reality. This is an experience that Neo has several times during the course of the movie. After being tormented and bugged by the agent, he wakes suddenly, short of breath, reassured that he mouth isn't sewn and he isn't in pain. Later he learns that his dream was in fact real, and a strange machine is used to forcibly remove the bug from his body.

But then Neo finds out the truth. His dream was not real because his experience of having the bug removed was not real either. Nothing to that point had been real for him (at least, we are led to believe this much. How can we ever be sure?) He had been living in a dreamworld all along, and he is forced to reconcile the difficult truth(?) that nothing is as it seems.