First, The Darkness scores a point and that Dreamer immediately flips their Awake/Asleep card to the Awake side. A Dreamer cannot be Awoken more than once per hour, so the same Dreamer having 2 of their Guardians lose fights still only scores The Darkness 1 point.
At the start of the next Hour, all Awake Dreamers draw back up to a full hand of cards.
The Awake Dreamers then get a mini-Tuck In phase, where they can equip new Items and Wards. They may also move an Item from one of their Guardians to another of their Guardians. They may replace Items or Wards they already have in play; if they do so the replaced Item or Ward is discarded, not returned to their hand.
Awake Dreamers do not do anything special if The Darkness Lurks.
If The Darkness Strikes, Awake Dreamers may not have Monsters assigned to them, may not spend Sand, may not play Action Cards, and may not activate Abilities on their Guardians, Items, or Wards.
At the end of the Hour, all Dreamers which have been Awake since the start of the Hour flip their Awake/Asleep tokens back to the Asleep side.