Hello,
This is something that has bothered me for years. When there is a character in your dreams (lucid or not) and you do not know them. Did the mind create them? Or do you think it is the subconscious either using a face you saw but did not take notice to, lets say a random person you passed at the mall. Or do you think the mind is putting together a face from parts of people you know. I don’t think it could be people you know well or you would pick up on that.
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Wow, great question… I think it would be difficult to find the answer. I’m sure it is a combination of real faces on some level, but probably remembered from throughout life so we have a pretty big pool to draw from. I always like to think of dream characters as pretty unique though, each one created by the brain with some subconscious intention.
Hi richardwalter 
Hm, as far as I know, we don’t create faces. As far as I know, we see ppl in our dreams we have seen already. As you already said, our SC saves a lot of faces. All those faces return when you dream, I think the brain just fills a gap: “I need a face here, let’s take that cashier guy from last Tuesday…” And yes, I believe we are able to mix them up: the nose from him, the eyes of her, the hair is from that child from the play ground… I think that’s how it works.
Of course, we can’t prove it! You cannot remember if you have seen that person from your dream or not, but I’m pretty sure we just see ppl we have seen already I’m visually impaired, so all faces I see are very blurry. The only faces I see clearly are friends, family, well known actors…
I did a bit research and read an article written by some professor who studies dreams, he analyzed about 5000 dreams. He says not quite the same as I do. Yes, he believes that we use images from reality to create new things in dreams but we are also able to create complete new things, new towns, new monsters and - why not - new faces 
So it depends. Sometimes you dream of someone you know, sometimes you mix two ppl together and, as it seems, you are able to create a complete new person.
Imagine that you hear about a person you have never met. Most people will make up a mental image of that person in their head. The brain has a good idea of what a human face look like, and most of us can visualise a stranger even in waking life.
I have seen people in my dreams with exceptional traits such as scars, odd growths, missing or deformed body parts, etc. I am almost sure that I have never seen a human look like that IRL. I would have remembered (I have a mild phobia of facial deformities)
I was waiting for some kind of reply like Siiw’s before commenting.
Here is my rant about this:
[spoiler]Suppose that the predicate “human mind cannot create a face” is true.
Then, let’s ponder about its impact:
I can give examples of animation software and video games which are capable of generating random characters. Of course there are parameters, but, still.
If our mind cannot create faces, we could say that computers have beaten humans in creativity.
From another perspective without computers, we could infer that every fictional character would be based on a real living person.
Every painting/drawing/artwork featuring a face would be some kind of portrait.
Suppose that “just mixing up is not creating”.
Time to ponder about its impact:
Consider that every language has a limited alphabet (set of letters). If you write a text in an existing language, you are just shuffling letters. This creates a permutation from the same set of letters. You are just mixing letters up. Therefore, writers (including poets) do not create anything, they just mix letters up. This post is just a permutation of letters.
Classical music composers use predefined notes that fit into a limited audible spectrum. There is also a limited set of octaves and a limited set of symbols to represent the duration of notes and pauses. When a composer writes a score for a music, they only choose a permutation of notes and timing. Then, they are just mixing notes (and pauses) up, not creating music.[/spoiler]
Thanks for asking this interesting question!
I hope this helps! 
Great post Tggtt.
The answer then seems to relate to the question of, what is the smallest unit from which our creativity forms itself?
I would say we do create completely unique faces. If we’re able to construct a unique face from a known set of eyes, a nose, and some ears - well what makes a nose unique, its shape, the color of its skin, the size of its nostrils, etc? Surely our brain can play around with those variables.
I belive you stepped on a good point about the smallest unit of the creativity.I am also thinking that the human mind can create unique faces beyond we have seen IRL .
Becasue i think , human mind can understands the patterns , and also geometric shapes that patterns formed. With the essence of creativity he can use this patterns to create new shapes. And that essence/unit for creativity is infinity. I think in our SC , there is a concept of infinity beyond our personal knowledge that creates the reality that we percive. Its actually can be seen on the real life too.
For example , actually in which part , two object gets seperated ? It looks obvious for us that its seperate but in microlenghts , we cant talk about atoms specific positions. Because of there is also a wave character that matter shows. Waves is not like particles. They are continous.
Think of a number line that shows two integers “1” and “2”. Actually in which part they get seperated ? There is a infinite reel numbers between two. That infinity between two seperate particles , or as we say numbers , is the thing that what makes a wave continous. Thats why our SC has this concept if infinity, a simplest unit that creates the imagination and creativity.Its in our perception , we percieve it . It is the essence .A weird question that comes to my mind is that , can our minds imagine a perfect circle ?
Because “infinity” is base of our finite percived reality , our mind doesnt clueless at all about shapes and patterns that we havent seen. Actually one of the craziest assumption is that , because of creativity , our SC knows all the possible patterns that we can percieve and beyond.
Caution: loooooong post !!! 
By now it is quite widely scientifically accepted that the mind works as a massively parallel hierarchical pattern processing unit
I recommend reading a book called “How to create a mind” by Raymond Kurzweil, it is really interesting (he is a lucid dreamer, too)
In short: every information in the mind is treated as a series of hierarchically organized patterns, e.g. areas of different brightness are organized into edges, which become lines and curves, which in turn are organized into letters, letters into words, which are connected to the stored meaning(s), then words are organized into sentences.
The patterns which get activated the most get reinforced by stronger neural connections
The mind also continually makes predictions on the next patterns it will recognized, based on the pattern already recognized so far
This is why the famous trick of properly reading sentences containing words having only the correct starting and ending letter works just fine
Note: modern AI learning algorithms, e.g. computer image/speech recognition work using the same approach
The same happens with faces, edges are interpreted as eyes, mouth, nose, etc, with some specific characteristics, and stored as patterns; next step is storing the pattern of those peculiar face characteristics together with its “label” (name of the person), which in turn is a pattern of symbols (letters)
Interestingly enough, faces are the first thing the mind uses to train its visual area, by studying and storing mommy’s facial features
As children we are not born blind, our eyes work, just our minds don’t have stored patterns that we can use to build meaning from the mess of visual stimuli we receive; we start “seeing” things as soon as we match enough stored patterns
Since we are so well trained in recognizing faces, this is why it’s so easy recognizing faces even when they are not there (e.g. Moon and Mars craters)
Now, is the mind capable of creating something “new” by assembling stuff it already knows ? I’d say there is no doubt the answer is yes, you do it every time you talk, write, cook, drive, whatever.
Is the mind capable of creating a believable mental image starting from stored visual and content patterns ? Most definitely yes, you experience this when it creates every part of the dream environment, e.g. buildings having a reasonable amount of bricks and windows, lifelike roads with streetlamps, fences, houses, trees, road signs etc.
Is the mind capable of building a never mate face from the stored patterns ? Based on the above, and knowing the mind is particularly well trained in recognizing faces, I’d say we can safely answer our mind can do it easily.
Now, having to create a face in the dreamscape, would our mind prefer re-using a face only seen once (a never met before supermarket cashier), or build it from scratch, assembling known patterns ?
I’d say it depends: if the cashier has in some way aroused our interest, even subconsciously (e.g. she was cute) perhaps its neural connection is strong enough that our mind can recover it and reuse it (maybe, at least partially)
On the other hand, if the cashier was all-around average, most likely its connection will be over-ridden and reused (re-wired); at that point, I guess our mind would be more likely to just make the new face up
TL;DR: IMHO during dreams the mind does both, it creates new faces, but also reuses known ones
I believe personally from my experience, that the brain is capable of combining faces that we have seen already into different combinations, along with some subconscious tweaking as well, such as changing eye colour.
For instance I once saw a DC with vibrant purple eyes!
The mind is capable of everything. I also think it can mix up different faces which play an important role in our lives. Or faces of peolple who have a kind of emotional connection to is. This happens very often.