The first time I saw it, I was thinking that he was in the dream world and Mal kept coming back from the real world to try to bring him back, but now I think he is in the real world.

However, there is some cool discussion going on in CoT about all of this. Like Cobb's kids being his totem, though that does not really make sense because are totems not something you already have with you that will appear in anyone's dream? These would moreso be from himself that someone else could not place.

Also, the top wobbles a little and does not right itself, making me think it will soon fall, since the top never wobbled in the dreams.