Can we live happily?

Certainly yes, but only under certain conditions.
If you do not have basic physiological needs (water, air, food, recreation, clothing, health, etc.) in any case we can say that we live happy, even we can say it does not really living, in the absence of air or water even we can not live.

Why do we dream when we sleep?

All people dream, some more others less. Dream is the way the brain is resting and empties million Giga Bitzi of information that are meant not to be able to stay conscious.'s Dream can be called so a conscious subconstiet discharge.
We need dreams