Dreams do not occur at unthinkably high speed. Dream images occur all over the brain. All the images in a dream occur at the same time, generated by different parts of your cortex. The brain is so made as to require some kind of order, and it assigns times to the images.
I realized this when I learned that you keep having the same dream over and over as you sleep. The dream you have just as you're waking, however, is a lot saner than the one you had shortly after you fell asleep. If you wake with a dream of being in a bubble bath, the dream you had initially was more like swimming in an Olympic-sized pool full of Fizzies.
This is also why the sequence of a waking dream is just about exactly as logical as an episode of Monty Python. The BBC insisted that there be some kind of connection between one segment and the next, so they came up with links that may politely be described as arbitrary. (Or, impolitely, aberrant.) This is what your brain does.
As you have the same dream over and over, your brain keeps fine-tuning the images and connections between them, seeking to render them at least linear, if not altogether rational.
The reason I was able to figure this out has to do with something peculiar about me.
I can do this as an act of will.
That is, I have edit and rewind functions in my dreams. If I don't like content or a sequence I can get a do-over.
What disturbs me about this is that it means that at some level I am always conscious.
I think this is why I can't be hypnotized either.