In How To Study, one of the recommendations was “The night before the exam, review the toughest material right before going to bed.”
The December 3-4, 2011, Wall Street Journal article To Sleep, Perchance to Dream–But Why?, by Matt Ridley, answers why.
Ridley writes that recent research on dreams has shown that dreaming is a symptom that our brains are transforming new memories into more permanent memories, giving the memories mental context and extracting their meanings. He writes that people dream throughout sleep, not just in REM sleep, and that non-REM dreams are more literal than REM dreams.
The bottom line is that sleeping improves memory performance.