Sleep...

What's the best way to deal with the fact that characters need sleep too? I've seen it handled several different ways, from ignoring it completely to making it a driving motivation for the story.

Often, it feels like an inconvenience. We tend to ignore several of the more visceral human urges in stories, except when they're important for moving the plot along. In general, it doesn't matter that the main character is hungry or thirsty or has to go to the bathroom... unless it does matter that the main character is hungry or thirsty or has to go to the bathroom. Like many details in a story, only the relevant ones get mentioned.

When I'm writing a first person or third person restricted POV, I sometimes have to remind myself that I'm not trying to replicate precisely what that person would be thinking in that particular set of circumstances. I want to create the illusion that's what I'm doing, while instead using those thoughts to move the action and characterization along.

For that matter, is dialogue any different? I want to maintain the illusion that my characters are just chatting away, each pursuing his or her own reason for being part of the conversation, but really I'm the puppet master putting them to work.

But I digress. If it is incumbent upon me to only bring up those details which are important to the story, then I suppose it's okay to occasional neglect to take care of my characters biological needs. At least, so long as that neglect doesn't become a plot hole. Perhaps it's a good idea, in general, to leave open spaces of time in between scenes to allow for a little alone time.