Sleeping is a mechanic in Palworld to skip the night or regain health.
Player[]
When the player sleeps, their health will quickly regenerate, even when starving. Additionally, if it's night time, sleeping will skip the night and wake up a bit after the start of the new day.
Pals[]
A lot of Pals sleep at night. There are some exceptions, which are often Pals of the Dark element. These Pals will continue working at the base throughout the night, and won't require a bed to accommodate them. However, do note that this means they won't get any of the benefits of sleeping, as well as having a higher chance of their sanity dropping if left unchecked.
Sleeping will help restore a Pal's health. Pals with low health may sleep to heal. As a result, pals that are starving (and low on health) will sleep too. Starving Pals won't lose health while sleeping. Pals at the base will wake up if there is a raid.
Sleeping Pals are easier to catch than when they are awake. You can get an additional "Back bonus" if you aim at them from behind. Sleeping pals will wake up when attacked; this includes being hit by a pal sphere.