Yoga Nidra is best understood within the context of the structure of the Universe as explained by the Mandukya Upanishad. The pinnacle of the wisdom is contained in the twelve verses of the Mandukya Upanishad, which outlines the philosophy and practices of the OM mantra. The 5th and 11th verses define the domain of Yoga Nidra, known as Prajna or Deep Sleep. It has been said that the juice of the Vedas is in the Upanishads, and the juice of the Upanishads is in the Mandukya Upanishad.
Verses 1-2 describe the Self and the Absolute. Verses 3-7 explain the four levels of consciousness. Verses 8-12 outline the four aspects of AUM.
The Self and the Absolute (1-2):
All is OM: The whole universe is the syllable Om. Following is the exposition of Om. Everything that was, is, or will be is, in truth Om. All else which transcends time, space, and causation is also Om.
Atman has Four Aspects: All of this, everywhere, is in truth Brahman, the Absolute Reality. This very Self itself, Atman, is also Brahman, the Absolute Reality. This Atman or Self has four aspects through which it operates.
Four Levels of Consciousness (3-7):
First is Waking / Gross: The first aspect of Atman is the Self in the Waking state, Vaishvanara. In this first state, consciousness is turned outward to the external world. Through its seven instruments and nineteen channels, it experiences the gross objects of the phenomenal world.
Second is Dreaming / Subtle: The second aspect of Atman is the Self in the Dreaming state, Taijasa. In this second state, consciousness is turned towards the inner world. It also operates through seven instruments and nineteen channels, which engage the subtle objects of the mental realm.
Third is Deep Sleep / Causal: The third aspect of Atman is the Self operating in the Deep Sleep state, Prajna. In this third state, there is neither the desire for any gross or subtle object, nor any dream sequences. In Deep Sleep, all such experiences have receded or merged into the ground of undifferentiated consciousness. Here, one is filled with the experience of bliss, and can also find the way to clearer knowledge of the two preceding states. (This is the domain of Yoga Nidra, conscious Deep Sleep.)
Find the Experiencer: The one who experiences all of these states of consciousness is the omniscient, indwelling source and director of all. This one is the womb out of which all of the other emerge. All things originate from and dissolve back into this source.
The Fourth Aspect is Turiya: The fourth aspect of Atman or Self is Turiya, literally the fourth. In this fourth state, consciousness is neither turned outward nor inward. Nor is it both outward and inward; it is beyond both cognition and the absence of cognition. This fourth state of Turiya cannot be experienced through the senses or known by comparison, deductive reasoning or inference; it is indescribable, incomprehensible, and unthinkable with the mind. This is Pure Consciousness itself. This is the real Self. It is within the cessation of all phenomena. It is serene, tranquil, filled with bliss, and is one without second. This is the real or true Self that is to be realized.
Four Aspects of AUM (8-12):
Those Four are the Same with "A-U-M" and Silence: That Om, though described as having four states, is indivisible; it is pure Consciousness itself. That Consciousness is Om. The three sounds A-U-M (ah, ou, mm) and the three letters A, U, M are identical with the three states of Waking, Dreaming, and Sleeping, and these three states are identical with the three sounds and letters. The fourth state, Turiya is to be realized only in the silence behind or beyond the other three.
The Sound "A" is Waking / Gross: Vaishvanara is the consciousness experienced during the Waking state, and is A, the first letter of Om. That simple sound of A is first and permeates all other sounds. One who is aware of this first level of reality has fulfillment of all longings and is successful.
The Sound "U" is Dreaming / Subtle: Taijasa is the consciousness experienced during the Dreaming state, and is U, the second letter of Om. This intermediate state operates between the Waking and Sleeping states, reflecting some qualities of the other two. One who knows this subtler state is superior to others. For one who knows this, knowers of Brahman, the Absolute Reality, will be born into his family.
The Sound "M" is Deep Sleep / Causal: Prajna is the consciousness experienced during the state of dreamless, Deep Sleep, and is M, the third letter of Om. It contains the other two, and is that from which the other two emerge, and into they recede or merge. A knower of this more subtle state can understand all within himself. (This is the domain of Yoga Nidra, conscious Deep Sleep.)
The fourth aspect is the soundless aspect of Om. It is not utterable and is not comprehended through the senses or by the mind. With the cessation of all phenomena, even of bliss, this soundless aspect becomes known. It is a state of nondual (advaita) reality—one without a second. This fourth state, Turiya, is the real Self or true Self. One with direct experience of this expands to Universal Consciousness.
In this video, the enlightened master Paramahamsa Nithyananda presents a discussion on Yoga Nidra by first giving the technical knowledge about sleep as being one of the modifications of the mind. He talks about how the quality of sleep determines the quality of waking state. Having an aware deep sleep state can lead one to the state of samadhi. This technical knowledge is then followed up with a powerful meditation technique to get make oneself more aware of their sleep state. This is a techique for changing ordinary sleep into Samadhi. This is the ultimate aspect of Yoga Nidra and involves a 10 minute meditation just before retiring for the night.