I have heard the theory that our world is just a dream of Azathoth multiple times and it is of course a very famous presumption by Descartes, that our world is a demons dream. What do you guys think? I think it is a viable theory, but I'd rather like to think that Azathoth is an incarnation of chaos and that he ultimatly stands for the chaotic nature of the universe, which is a truely horrifying idea for humans that like to understand, catalogue and explain their universe. Therefore I would rather say he is a mere literary figure in Lovecrafts universe itself.
... that he ultimatly stands for the chaotic nature of the universe ...
Not only the chaotic nature of the universe, but also the center of the universie, hence the name: Nuclear Chaos. With Azathoth being the center of everything even chaos itself.
I like your theory!