We dream — it is good we are dreaming —

We dream — it is good we are dreaming —
It would hurt us — were we awake —
But since it is playing — kill us,
And we are playing — shriek —

What harm? Men die — externally —
It is a truth — of Blood —
But we — are dying in Drama —
And Drama — is never dead —

Cautious — We jar each other —
And either — open the eyes —
Lest the Phantasm — prove the mistake —
And the livid Surprise

Cool us to Shafts of Granite —
With just an age — and name —
And perhaps a phrase in Egyptian —
It's prudenter — to dream —
                              F584 (1863)  J531

This rather haunting poem begins and ends with the claim that it is "good" and more prudent to spend life dreaming rather than with eyes open. There is a "truth – of Blood" that kills people "externally" but there is a type of "dying in Drama" where some other "it" plays the game of "kill us". As long as the "we" play along, shrieking as children do at play in some dark scary room, the drama will continue. 

There are numerous instances of "it" in the poem. Something, some malevolent force or being, is playing, and that "it" may be the same "it" as the one that "would hurt us – were we awake". The other its seem to stand for a condition: "it is good we are dreaming"; "It is a truth". The muzzy effects of the its give the poem itself a dreamlike quality. The players themselves don't seem to know what 'it' is. 
        They suspect enough, though, to stay in a dream state. In this drama of kill and shriek, the players are "Cautious" in their fight, not wanting to open their eyes, for they have a premonition that the phantom monster is real and not some dream figure at all. The resulting "livid Surprise" of seeing it would freeze their blood, turn them into their own gravestones reduced to just their ages and names. 

Obelisk at Alexandria

        The "phrase in Egyptian" is an interesting touch. Dickinson originally wrote "a latin inscription" but that isn't spooky at all. Dickinson would have known about the ancient Egyptian obelisks, carved out of granite and inscribed with Egyptian hieroglyphs, one of which had been removed to Paris about the time she was born. Turning into "Shafts of Granite" with Egyptian writing is an exotic bit of mythology in keeping with some supernatural hunter. 

It is also interesting to think of this poem against its backdrop of the Civil War. Is it better to live in an eye-closed state of denial than to wake to the bloody reality? Dickinson is not an eyes-shut sort of poet, so this reading doesn't have traction with me. Instead, I think she is thinking existentially. There is something here of the Gothic horror of "The Soul has Bandaged moments" (F360) where the soul is stalked and molested by "some ghastly Fright". It doesn't kill but it puts "shackles on the plumed feet" and "staples, in the Song". Another Gothic nightmare is depicted in "One need not be a Chamber – to be Haunted" (F407) where the "External Ghost" is less to be feared than "one's a'self encounter". That would indeed be a Drama "that is never dead". And perhaps the only moment you encounter that "superior spectre" that lurks within is at death. Until then you can maintain the charade that the fearsome haunting is just some ghastly dream.