Hypnagogic hallucinations are the images and sounds you experience just before falling asleep, although they are only one aspect of the hypnagogic state. While falling asleep one might experience vivid fantasies or visions, sleep paralysis, and lucid thought, but these are not considered hallucinations. Hypnagogic hallucinations are related to the other hypnagogic phenomena, but are less coherent, are not lucid, and are not voluntary or controllable. They are also not technically true hallucinations, and are sometimes referred to as pseudo hallucinations, as they are perceived as occurring entirely within one's own head. Moreover, visual pseudo hallucinations are rarely, if ever, mistaken as 'real' events, although auditory hallucinations may be.
These hallucinations are very common, and although it is hard to get accurate statistics, it is generally agreed that the majority of the population experience them to some extent. They are harmless, and many people enjoy them and even report them as sources of creativity: Edgar Allan Poe worked hard to record his, feeling that they improved his works, and August Kekulé reported that he realized the ring structure of benzene when watching the ersatz molecules that appeared as he drifted to sleep.
Visual Hallucinations:
Visual hypnagogic hallucinations tend to take the form of patterns, faces, or objects that move across the visual field with no control from the person experiencing them. Importantly, these are not dreams as we tend to think of them, as there is no narrative nor an imaginary 'world' in which they take place, and you do not interact with them.
Many people report slideshow-type sequences of individual images, flashing from object to object, often with some sort of free association connection between objects. Abstract patterns are common, which often move, rotate, or transform. The type of hallucination is tied to the brain area that happens to be active at the time. Activity in the fusiform face area of the visual cortex results in visions of faces, sometimes deformed. Corresponding areas of the left visual cortex process writing, including text, numbers, and musical notation, which may appear and mutate, or simply cover the visual field. While it is possible that the text may appear meaningful, in most cases it will be 'babble', to which the brain attaches a spurious feeling of meaningfulness.
These visual hallucinations also often involve differences in color, being overly-vivid or monochrome. Sometimes one might also have differences in resolution, with hallucinations that are unrealistically sharp, or zoomed in to microscopic levels; likewise, textures may be exaggerated. Any of these various scenes and aspects may occur alone, in conjunction, or even in fairly complex collages.
The Tetris Effect:
Related to this is the Tetris effect. In the past this effect was referred to as perseverative images, and was described in various ways -- someone who had spent the day driving along roads lined with hedgerows would continue to see hedgerows in their mind's eye as they fell asleep, or someone learning chess would replay random chess moves. Today, we usually experience this in the context of computer games, and the name 'Tetris effect' has stuck because Tetris is indeed fairly effective in inducing it.
While any sense can be involved in hypnagogic hallucination, senses of movement and touch are not usually reported -- except when it comes to the Tetris effect. People who have spent the day on a boat may feel the swell of waves again as they fall asleep, skiers may feel the push of leg muscles against the pull of the ski, and rock climbers may feel the rub of stone against their fingertips.
Auditory Hallucinations:
Auditory hallucinations are also common, and in some cases are stronger than the visual. Many people hear a voice calling their name, a phone ringing, a baby crying, or a dog barking, causing them to wake up; most of us learn to ignore these fairly quickly, but they can often be strong enough to make one wonder if they were indeed real.
Also common are music, snippets of conversation, and random environmental sounds. It is not uncommon to hear babble, much like the nonsense words that appear in visual hallucinations, and likewise this babble may have a superficial feeling of meaningfulness. It is likely that these are as common, or perhaps even more common, than the 'alerting' sounds mentioned above, but a common feature of hypnagogic hallucinations is that they are permanently forgotten as one falls asleep, and are best remembered when one suddenly wakes up while in the hypnagogic state.
Others:
Any sensory input can be replayed as a hypnagogic hallucination. Visual and auditory are the most commonly reported, perhaps because the sizable areas of our brains given over to these tasks, or perhaps because they are the sort of thing that we are most accustomed to talking about, and therefore most likely to remember and report. This may also be affected by our familiarity with pictures and sounds occurring in isolation, whereas we are more likely to experience touch, smells, and proprioception as part of a complex, integrated event.
Perhaps surprisingly, hypnopompic hallucinations, those that occur when one is waking from sleep, are a completely different beast. They are much rarer, and tend to present as a continuation of a dream state into the waking world, with the effect that they are much more like traditional hallucinations -- they appear to be happening to you, rather than being played out safely behind your eyelids. The differences are so significant that you will in fact find reports of experiencing 'hypnagogic hallucinations' as one wakes up, and vice versa, simply because it would be misleading to treat the two types of hallucination as if the primary feature was when they occured.