Traditionally, sleep and wakefulness have been considered as two global, mutually exclusive states. However, this view has been challenged by the discovery that sleep and wakefulness are locally regulated and that islands of these two states may often coexist in the same individual. Importantly, the local regulation of sleep seems to be key for many of the known functions of this physiological state, including the maintenance of brain functional efficiency, the consolidation or stabilization of new memories and the modulation of mood and emotional reactivity. Local changes in brain activity during sleep may also explain the emergence of particular conscious experiences in the form of dreams, and may modulate the level of sensory disconnection that is essential for a restorative sleep. On the other hand, during wakefulness, the reiterated activation of specific brain areas may lead to a state of functional fatigue, characterized by the appearance of local, sleep-like episodes. These events seem to have important consequences for behavior and cognition and may contribute to explain the known effects of sleep loss. Given these premises, alterations in the local regulation of sleep and wakefulness may represent the pathophysiological basis for symptoms observed in many sleep disorders, but also in some psychiatric or neurological disorders.