I'm not too sure I said that as well as I could. I'll try again.
In a dream state, things make perfect sense, resulting sometimes in a very intense feeling, which lasts in to the semiconscious state that we are in, on being woken up, usually in the process of dreaming. In that semiconscious state, you can capture some of that certainty, if you record it quick enough. The longer you leave it, the less intense the feeling and the less sense it makes to your now logical examination of what you can remember.
An example is the way in dreams that individuals will change quite seamlessly in to someone else, or places will do the same. It make perfect sense at the time.
I think you are right about those people being in a 'different' condition most of the time and creating in that condition. It probably explains why in the article, Robbie Robertson seems to know exactly what the song meant at the time, but seems less sure the more he thinks (logically) about it.
The other point of course is that if he could have explained it, he wouldn't have needed to write the song.