I once read a book, I think it was by the same person who wrote Animorphs, actually, in which the characters were all(or mostly) people from the "real" world who had been plunged into a new, fantasy world. But the thing was, when they slept in the fantasy world, they went back to the real world, where they had been functioning on autopilot before(and at least one character had a third layer for when he was sleeping in both the "fantasy" and "real" worlds). IIRC(it was a long time ago I read this) one character met another of them in the "real" world, but continued to act as if they weren't both a part of the "fantasy" world. I guess because he wasn't sure they all experienced it. 

I don't know where this is going, but it's what I thought of. There could be a sleep and dream world type deal. 

Oh, and here's an original idea I've had before:
When you die, you "drop down" a layer, and enter another earth that's geographically identical to the first one. All people who have died have passed through here, and when they die here they drop down yet another level, and it goes infinitely. The first layer is where most people originate, and they are almost entirely unaware of the other layers. The lower layers are technologically and ideologically much different, the further you go. And what if there were people who were capable of traveling both directions? Or conditions in which you could travel "up" a layer?

I'm rambling now, but here are things that I thought of when reading this thread, figured I'd throw them in.

EDIT: Book series was called Everworld, and it was indeed written by K A Applegate. Probably I remember it very vaguely, but the above ramble is what I got out of it.