>Or, what is YOUR best description of what is happening here?
A virtual reality in form of a dream, created by all dreamers collectively. What is percieved is simply dreamed, what is dreamed can be affected just like in lucid dreaming, but it's harder when it's not just your dream alone.
>What is life, honestly?
A dream of god, of whom we are either all splinters or at least share abilities with, even if some of us may be seperate souls.
>What gives us purpose to act, to change our surroundings?
Personally, I watch live as some sort of videogame. Sure, what gives the gameplay purpose is improving yourself and the world, but what gives the GAME purpose is simply to have fun.
>What is YOUR best description of this predicament we find ourselves in?
Be it a matter of time, space, frequency or a combination: In the plane we live in physically it is very hard (but not impossible) to manipulate reality around us compared to, for example, the astral plane. This may be because of the high density of souls on this planet or maybe it's just the natural way things are and the ability to directly manipulate reality will come back to us at some point.
Also, just because this is a dream doesn't mean it's not real. I bet if the dreamer were to wake up he would just find himself inside of another dream of which he isn't the host - and this would go on for infinite layers.