Why does even the most rational brain forget logic in a dream? Scenario 1) Now we all know gravity is real. Yet when we dream that we are flying we forget/or are oblivious to the entire concept of gravity as if you have never experienced gravity.

Scenario 2) When dreaming of a deceased relative long or recent sometimes the dream is in their lifetimes and during the dream the brain has no recollection of the event of their death.

In both these scenarios you can control the dream for example if you are flying you can change directions or set the scenery and are aware you are dreaming but the things you are unaware of are GRAVITY AND DEATH. And as soon as you wake up or figure out the reality you become awake. So my question is why does a brain forget reality/logic in a dream?
Neither rational nor logical

&quot;...there is overwhelming evidence that Humans cannot be [rational]&quot; - Daniel Kahneman (Thinking Fast and Slow).

To begin with, the brain is neither rational nor logical as you may think (to a large extent it is little rational and its logic is completely fuzzy). A perfectly rational and logical organ would not be able to keep us alive (such an organ could take 4 hours to choose between two bottles of wine).
So I assume that your question is more like:

How comes dreams often involve augmented reality?

On augmented realities
Try this: shut your eyes and try to imagine your lower body replaced with that of a horse. Can you do this?

You have not done this whilst dreaming, but whilst awake and conscious.
Can you bring memories of a deceased relative whilst awake? Sure you can.
So the ability to experience augmented reality is not reserved for dreams - we can incite such reality by conscious means, certain drugs or brain damage.
Whilst you were dreaming
There are various theories on why we dream and what happens whilst we dream.
A key to many theories is random brain activity. You actually experience this whilst awake when you leave the central executive mode (stay-on-task) and enter daydreaming one - where short thoughts are following in what often seems as random.
Such random activity is fully capable of triggering augmented reality, like a half-man half-horse.
There is a higher likelihood for such augmented reality to appear in dreams, since random activity is not tamed by the stay on task mechanism.