The witness witnesses the waking or dream as a whole.

The difference within waking or dream does not affect their formless witness in any way. Within the waking or dream the objects may be different from each other. But there is a single witness of them all because the witness witnesses the waking or dream as a whole.

When one says 'I hear', 'I touch', 'I see', etc. the hearing, touching and seeing are experiences within the waking or dream but all these are experiences experienced by the false self within the false experience, because within the waking or dream the physical apparatus is considered as self, whereas the true self has no physical apparatus.   Thus all the experiences are falsehood.

 

 The three states are an object to the subject, which is consciousness.  The objects are also different. But the 'consciousness ' that knows them all one and the same in and through all the experiences. Only within the waking or dream one is able to know distinctions like form, time and space and pain and pleasure, etc. But the knower is undivided and undifferentiated in and through all the experiences of the three states.

Formless knower [witness] is not differentiated from the known. It is because the knower and the known are one and the same. Since the experiences are varied when do we know the formless knower, to be undifferentiated?

 When self is mentally separated from the three states after realizing the subject object relation.   The Consciousness is hidden within the three states as their form less substance. Consciousness is apart from the three states as their formless witness.  It is apart because it is neither the waking entity not it is the dream entity but the formless witness of all the three states.

When the three states, which are mere object to the formless subject is dropped mentally, then the Consciousness alone prevails in its formless nondual true nature.