Let me try to explain the storyline again, as I clearly haven't done a good job of it. I apologize and I know my plots get convoluted.
The whole story idea comes from me reading the Beholder's "warp reality" regional effects, the Elder Brain's "creature sense" and the Hags "Nightmare Haunting" abilities.
backstory + plot:
The Beholder lives in the tower. He warps reality in a 1 mile radius when he dreams.
The EB, Hags and Nightmare druids decided to work together and combine their powers. The NDs link everything via their dream powers. The hags give the beholder bad dreams. The EB extends the Beholder's range to 5 mi and amplifies its dreaming powers.
So lots of beholder-inspired monsters (carrion crawlers with extra eyes, emotional monsters, etc) pour out of the tower and attack the underdark, specifically the Dawi.
The Nightmare Haunting is also draining 5 HP per day from the Beholder and if\when it dies in its dream, it becomes a Death Tyrant.
current events, after chapter 1:
The party has been helping their friends, the Dawi. They have now found out "what is going on" and are headed to deal with it. The Arcane Tower is the big dungeon (3 levels) and chapter 2. The Mindflayers are level 1 on the outside. The Hags are level 2 and the nightmare druids are level 3.
mechanics of dungeon crawl and chapter 2:
if you don't kill the EB (you just sneak past it) you won't be able to long rest, because it will sense you in the tower and send enemies to interrupt your long rest.
assuming you kill the EB, if\when you do long rest, your 8hr non-detection will wear off and you will be dealing with the hags in the dreaming. maybe you want this or maybe you don't, that's up to you.
in the end, you have to choose to either fight the beholder in the waking world or fight the nightmare druids in the dream world. again, up to you.
body rob, search for treasure, lots of drinking with dwarves, etc etc