The waking sleep vial is made by using some ground tooth with a guam-marr vial, and grants a total of 168 Herblore experience (84 per herb, none for ground tooth). It is a potion used to access the Dream World in the Lunar Diplomacy quest. The player pours the potion on the magic kindling to get a soaked kindling, which is then lit on fire to be transported to the Dream World. The vial becomes an empty vial after use and has no further use once the quest is completed.
However, as long as you don't complete Lunar Diplomacy, you can train affordable (but time consuming) herblore experience. Right after having given the full lunar equipment set and waking sleep vial to the Oneiromancer, she will then return these items to you along with some kindling. The method revolves around using the kindling she gives you on the waking sleep vial, which results in soaked kindling and an empty vial. You then promptly drop the soaked kindling, keep the now-empty vial, speak to the Oneiromancer and skip through some dialogue to receive another waking sleep vial and kindling. This process can be repeated over and over until your inventory is full. You can then bank, fill them with water, and add guam and marrentill to them at your leisure (but remember that adding the ground tooth is pointless as it grants no xp). Ultimate ironmen will have to go through the process of deleting each guam-marr vial as they are quest items, but any other account can simply bank and incinerate them all at once. Finally, the empty vials can not be noted, and reportedly you can gain experience from them even after Lunar Diplomacy is completed, but you simply can't get more of them.