I haven’t seen a topic on this before so I thought I’d share this new information.
My sister heard that you can’t make up faces in your dreams; you’ve seen every face that you dream about before. Now that I think about it, this seems to be true. What do you guys think?
nope not true. although most of the people in your dream are poeple you have met before, I can definetely remember a couple of dreams where there were completely made up people.
You can make the argument that it’s all just the thousands of people we’ve seen in the corner of our eyes, but there’s no real way of proving it either way. The way I see it, if our mind can make up an entire dream world, surely it can generate a person.
I don’t really have an opinion on that. Like Rhewin said, we sometimes see hundreds of people in 30 minutes, and therefore the DC could be any of them.
I have a hard time remembering faces in LDs though. When I summon a person, s/he might just appear headless or faceless,and that is just normal. 
I believe you can only dream what you’ve seen before, even if you conjure something totally different it will just be various objects you’ve seen before mixed into one. Like some people tried to dream of a new colour, it will just conjure up a colour you’ve seen before but you think of it as another.
Whenever you dream of people you’ve never met, like I met my grandparents who died before I was born, they often don’t have any facial features.
I share the same belief. When I see people I’ve never met, they’re facial features are either non-existant or constantly changing/
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Same. 
Well, I’m faceblind. I see new people everyday. 
So I don’t know if the faces I’ve seen in dreams are new or not. No way to tell.
I see no reason why the brain could not generate a face. There is nothing special about faces that make them harder to make up. In fact, there is reason to believe it is easier for the brain to make up faces as we seem to see faces in inanimate objects and the like. And I have seen objects in dreams that I know I have never seen IRL, because I cannot even begin to identify what they are, so I don’t buy that the brain has no creativity whatsoever, regarding objects or faces. I see no reason why one would make that assumption.
“Creativity is the discovery of new ideas or concepts, or new associations of the existing ideas or concepts, fueled by the process of either conscious or unconscious insight.”
Sure, you could make up a face, but it would contain parts of images you’ve seen before, whether or not you remember seeing them before. Your brain takes in so much information everyday and only a small amount of it is used or remembered. That’s why I believe dreaming can revive old memories that have been lost.