A Model of Non-physical Punishment

Gemara: Rav Chisda said: A bad dream is harsher than lashes, as the pasuk says, "Hashem made that they should have fear of Him" (Kohelet 3:14), and Rabba bar bar Chana explained that this is referring to a bad dream.

Ein Ayah: Affliction of the spirit is much greater and more troubling than affliction of the body. Therefore, a bad dream, in which Divinely-inspired fear impacts on the power of imagination of the spirit, is more powerful than physical pain.
This power itself is exactly what engenders the positive part of a bad dream. This is because the fear of punishment, which is important for the furtherance of the world, has to be able to be perceived in a way that man can absorb it. In order to fully fear punishment, one has to know of the idea that the soul lives on after the death of the body, at which time it will receive its reward and punishment. However, man, who is steeped in the material world, has trouble picturing punishment of the soul. For that purpose, a nightmare comes to cause a person poignant spiritual pain and fear of a type that gives him some idea what he may feel in punishment after death. In this way, he is less likely to be tricked into believing that he will escape payment for his sins when he is dead. He will recognize that even without a body and its pain, one is capable of suffering in a spiritual manner, through fear, pain, and embarrassment that affect the spirit. This will give the dreamer a broader perspective of the proper fear of Hashem and His punishment.

Actual Truth and Theoretical Truth
(condensed from Ein Ayah, Berachot 9:40)

Gemara: [After the gemara discusses the idea that all dreams contain elements that are void, Rabbi Barechia is cited as saying something that seems an example of void in a dream.] Even though most of a dream may come into fruition, the entire dream will not come true, as we see from Yosef’s dream, as he saw the sun and the moon [representing his mother] bowing down to him, and at that time his mother had already died.

Ein Ayah: Void things in dreams are things that have nothing to do with that which goes on and are a result of the element of exaggeration in one’s imagination. However, a dream can be of the best possible type and follow the nature of the pure spirit. In that case, everything will be related to matters of truth, and there will be nothing void in the dream.
However, there are two types of truth that can be represented in a dream. There are simple truths, where the matter either already took place or will take place in the future. There is also a potential truth, where something of significance is worthy of happening, but in actuality it will not take place due to technical factors. Such a truth also has value and is not considered a void matter.
In this vein, Rav Barechia was saying that even the substantive part of a dream has elements that may not end up taking place. The example of this is Yosef’s dream in which he saw the moon, representing his mother, bowing down. This is not void because Yosef’s stature would indeed reach such a level that, in theory, his mother would have bowed down to him had she been alive. However, in practice this part of the dream was not fulfilled