You can't worry about things like that, otherwise you wouldn't be able to enjoy your life. If you spent all your time wondering if it was all just an illusion, then you'd miss out on an eternity of life. And even if you are trapped, there's not really anything you can do about it.
For several weeks after the battle, you have regular nightmares reliving the experience, reliving your failure. Then the whale council blames your whole squad for not protecting their vulnerability, their mortality. The merfolk pin that failure on you and grant you a permanent reprieve from active Everwarden duties. Not that the loss was your fault, but you demonstrated that you were too focused on going on the offensive. They say that while attacking the squid is definitely important, it's a losing prospect if you don't worry about protecting your fellow merfolk as well. They say that while fighting squid is all well and good, the ultimate goal isn't to kill them off, but to protect the whales.
You accept the excuse of a ruling because you have to, but you know that what happened on that beach was unavoidable. You've turned it over and over in your mind. Nothing you could have done would have saved those whales. Blaming you for their deaths is just the council's way of showing the whales that they're taking some kind of action, even if the council knows the action doesn't make sense.
At least your former superiors are kind enough not to bring up your sleeping troubles. They casually, pleasantly, offer you a low-stress maintenance job. When you're given your discharge, you almost don't want to tell anybody.