My husband sometimes is not sure where he is, especially in the morning or when I return from an errand. He also has very strange real dreams. Why?

Has this been happening gradually or all at once? There could be so many conditions linked to this kind of behavoir. Could be a mild stroke, low blood pressure in the morning, Alzheimers/Dementia, drug interactions, infections, or diabetes or diet...hard to say.
Has he been evaluated? I would start with a complete physical and blood work and go from there. Be aware that doctors are so quick to label anything and everything as "alzheimers" so find a good specialist if you suspect that this is the case. Also, keep a log of behaviors and changes.