Melatonin is such a strange chemical. I find that if I take 3mg and stay awake for a few hours after that, I get a little bit sleepy, but I daydream a lot. I can be talking to someone or watching TV and realize that I have been imagining a hypothetical situation, like a dream, but it hasn't been affecting my actions. In a way, two separate thought patterns emerge, one where I can function normally, and another in which my imagination runs wild. They exist simultaneously and the dreams don't seem to have beginnings or ends. It's kind of like a drug that induces the mind's eye.
Melatonin is effective as a sleep aid for me because it puts me right into dream mode. Normally I lie down and wait to just pass out, which is impossible if that's all you can think about. It's much easier to first go into wandering dreams and then deep sleep than from full consciousness to deep sleep.
When I'm conscious on melatonin, I find the daydreams are not able to affect my emotions. I can be imagining a nightmare, but I won't feel my heartbeat
increase until I start to recall it.
I imagine melatonin would be quite intense when combined with a psychedelic. The hypothetical images and situations you experience could be brought to life. The sleepy effects would be nonexistant but the dreamy effects would probably remain. I'll try it next time I trip, possibly towards the end.