Reviewed by Ian MacDonald, in Revolution in the Head:

Obliquely influenced by The Kinks' change of direction into down-at-heel English musical-hall with 'Well-Respected Man' and 'Dedicated Follower Of Fashion', this evocative number represents Lennon's first use of an idiom outside his usual range since the German ballad style of GIRL (accounting for the paradox that a song about lethargy was harmonically more active than anything he had written since GIRL itself). Lyrically, the subject was close to home, living as he was in a permanent psychedelic reverie. A personal confession disguised as the murmurings of a modern Oblomov [1], I'M ONLY SLEEPING dismisses the empty business of the mundane world with an indolence that holds the seeds of Lennon's later heroin addiction.

Recording was begun after a break for mixing the tracks already taped for Revolver. This was the first such session The Beatles had ever attended, an indication of how concerned they were with the integrity of the new sound-world they were creating. In about twenty-four hours of recording spread over four days, they worked hard to obtain the timbres they wanted, using varispeed to alter frequencies. (The thin, papery old man's voice Lennon wanted was obtained by a circuitous process of speeding up and down which ended with the track a semitone below its original key of E minor.) Most striking of the effects used was the backwards guitar part, constructed by Harrison during a painstaking six-hour session. Having worked out his Indian-style line in normal sequence, he had Martin transcribe it in reverse and then recorded it thus, subsequently dubbing the result on backwards to obtain the characteristic smeared crescendi and womblike sucking noises. Only the radiant free-tempo fade-out uses serendipity, combining a cyclic arpeggio with part of the 'fast gat' from LOVE YOU TO (played on guitar instead of sitar).

While not as showy as that of TOMORROW NEVER KNOWS, the texture of I'M ONLY SLEEPING, with its dreamy multitracking, dim halo of slowed cymbal sound, and softly tiptoeing bass, is equally deep in artifice. The Beatles were no longer interested in simulating their live sound under studio conditions, instead creating a new sonic environment in each successive track [2].

Notes:

1. Lennon would certainly have seen Spike Milligan's legendary performances in Oblomov (New Lyric Theatre, Hammersmith, October-November 1964) and Son Of Oblomov (Comedy Theatre, 2nd December 1964-30th April 1966), but we can only conjecture as to whether he had these in mind while writing I'M ONLY SLEEPING. A lifelong fan of the Goons, he also knew Milligan through Dick Lester, who directed The Running, Jumping, and Standing Still Film (1959) and The Bed Sitting Room (1969).
2. In terms of the way groups use recording studios, 1965-6 was a pivotal period. Until then, recorded songs differed little from their live versions. By mid-1966, cutting-edge pop records were harder, if not impossible, to perform onstage. For example, The Lovin' Spoonful could only roughly attempt a live version of 'Summer in the City'. (John Sebastian couldn't sing and play the piano part at the same time, so drummer Joe Butler had to take lead vocal.) The Yardbirds struggled to reproduce 'Shapes of Things' live, while The Beach Boys had slim hopes of performing anything from Pet Sounds in concert.