The characters literally combine to mean “a yellow millet dream.” The idiom's meaning comes entirely from its origin story, where a man dreams an entire lifetime in the short time it takes for a pot of yellow millet to cook.
The idiom `黄粱一梦` is deeply rooted in a Tang Dynasty tale called “The World Inside a Pillow” (枕中记, zhěn zhōng jì). The story goes: A young, ambitious scholar named Lu Sheng (卢生) stops at an inn, lamenting his failures in life to a Daoist immortal in disguise. The immortal gives Lu a magical porcelain pillow, telling him it will bring him glory. As the innkeeper begins to cook a pot of yellow millet, Lu lays his head on the pillow and falls asleep. In his dream, he lives a full and spectacular life. He passes the imperial exams, becomes a high-ranking official, marries a beautiful woman from a wealthy family, has children, survives political intrigue, and eventually retires as a respected prime minister, dying of old age surrounded by his family. Just as he dies in the dream, he wakes up with a start back in the inn. He looks over, and the innkeeper's pot of yellow millet is not even finished cooking. In the span of a few minutes, he experienced an entire lifetime of worldly success. He realizes that real life, with all its striving for fame and fortune, is just as fleeting and illusory as the dream he just had. He thanks the immortal, renounces his worldly ambitions, and follows him to cultivate the Dao.
`黄粱一梦` is a literary idiom but is well-understood in modern conversation, writing, and media. It's often used with a sense of melancholy, cynicism, or as a cautionary tale.
The connotation is almost always negative or, at best, a neutral philosophical reflection. It highlights the bitterness of waking up to a reality that doesn't match the “dream.”