It's one of those things the characters know but it's not explained to the audience because it's not relevant to the story, and the whole thing is so packed that there isn't much time for a lot of things that could be explored. If the matter of knowing whether they're in person's A dream was important to the story they'd explain it, but it isn't. You can imagine the suitcase they use is configured a certain way to allow one person to 'host' the dream.
The movie "inception" is similar to another movie made with Dennis Quaid made years ago called "Dreamscape", which was about a secretive agency that did experiments with people who has psychic powers and could masterfully control not only their dreams, but enter the minds of other people and control their dreams as well.
It's about being able to control one's own mind and focus on a particular person, even if you don't know them, but have either read about them or seen a picture of them. The focus is supposedly a specialized tuning, if you will. If it is practiced enough and mastered, then it could be done.
wow, cags that's a good analogy on the whole concept of "inception." i hope you won't get mad at me for responding to your post, but i just wanted to say that was quite a good analogy. plus, your like the only person that i know of outside of me and my father that actually caught onto how eerily similar "inception" was to "dreamscape." again, this isn't an insult, but a compliment.
They showed some instruments to connect to each other's dream. But big mystery which you need to understand in the movie was except the couple (leonardo/his-wife) rest of the characters were projection of their minds. And it's revealed at the end of the movie.
It's a pretty good movie, but would be better if you just watched it without the expectations....without having heard the hype first. I like movies like these where the script is well-polished and there aren't any clear plot holes (or even a lot of little ones).