Where do stories come from?

I got a story idea from a dream this morning . I jumped out of bed when my alarm went off at six in the middle of a fairly lucid, if a bit weird, dream. As I was making my cup of tea to drink while I got stuck back into The Novel I was still thinking about it and it formed itself into a story idea - a short story maybe or a segment of something longer (novel #3?). Anyway I typed it up straight away and have it now for future reference.

I introduced a new character into my novel this morning. He is key to the whole thing so I want to get him right and I was really pleased how parts of his character unearthed themselves as I wrote. The next chapter is looking a bit blank in YWriter at the moment but its going to be a biggy story-wise so I'm looking forward to getting stuck in - I'm going to go for the "just write it all down and see what happens" approach and see if I can surprise myself!