Very open subject anyone feel free to jump in with their theory no matter how outside of the box. So with how complex the human body is, why can we only stay awake for such little time before we feel physically and mentally drained? Does the memory we store have a toxic build-up effect? We go throughout the day processing our every waking moment, recording it all into our local memory. When too much is taken in within one awake cycle, it seems to have toxic effects on us.

Oftentimes, after I sleep I literally can't remember the movie I had just watched the night before(if it was a mediocre movie especially), and I know I'm not alone there. Sleep seems to have some type of "memory dump" effect in which we're just letting the localized memory refresh, dumping out a lot of the previous days memory, and then we wake up feeling recharged.

I don't necessarily know where I'm going with this but I think it's an observation worth mentioning. Our system(body) is more similar to the computers we use than we may realize.

What we experience during sleep, dreams, could very well be just as productive as our experience while "awake" here. In the bigger picture, what exactly is "being productive"? As you said, oftentimes we ARE more productive in our dreams than while awake, while our lives here are often mundane, we can have some pretty wild experiences in dreams. Perhaps you answered part of the question yourself, the experiences of dreams is part of the purpose of sleep.

I would have to say it's absolutely true we need sleep to reset our bodies. Try staying awake for 48hours you'll see what I mean lol. But back to my original point, what it is that makes us feel drained, I'm still leaning toward it being a necessary dump of short term memory. A few days ago I went out to eat with a couple of friends at a restaurant we frequent, the next day I was on the phone with one of them and we had both almost completely forgotten we were even there. "What'd you do yesterday?" "uhh... damn.. I can't remember!.. oh wait wtf, I was with you at Pegasus!" "oh, yeah".