The waking sleep vial is made by using ground tooth with a guam-marr vial yielding 168 Herblore experience. It is a potion used to access the Dream World in the Lunar Diplomacy quest by pouring it on the magic kindling yielding a soaked kindling. When that is lit on fire it transports the player to the Dream World. Pouring it out leaves an empty vial and has no further use once the quest is completed.
Before completing Lunar Diplomacy, collecting empty vials allows for affordable, but time consuming, Herblore training. After giving the lunar equipment set and waking sleep vial to the Oneiromancer, and getting back with magic kindling, use the potion on the kindling, drop the kindling and ask for another potion and kindling. The resulting potions are unusable.