The Night Dimension is the dimension in which dreams and nightmares take place, as well as where most of the events in the NiGHTS games take place. It is the home of Nightmarens of the Nightmare, the Nightopians of Nightopia, the Awakers and Owl.
Nightopia is the world of dreams which is shaped by the Visitor's Ideyas representing something releated to the Visitors. Nightopia is inhabited by Nightopians, Owl and Octopaw and is constantly invaded by nightmarens.
The awakers and the Alarm Egg appear to inhabited only Nightopia, though it's unknown if they originated from there.