Recent memories (so-called 'hippocampus-dependent memories') are stored in the hippocampus for up to about two weeks, during which time they are gradually trans

Recent memories (so-called 'hippocampus-dependent memories') are stored in the hippocampus for up to about two weeks, during which time they are gradually transferred into permanent storage in the neocortex, cerebellum, and other parts of the brain. So, to answer your question, that is where they are replayed from. The hypothesis is that the hippocampus is unique in being able to store memories quickly and after a single exposure. Most of the rest of the brain needs time and repeated exposures to store a memory via long-term potentiation. The role of the hippocampus is to act as a buffer where memories are kept temporarily. While you're sleeping, your hippocampus repeatedly activates the memory, stimulating the brain in a similar way that the original event did. Slowly, the neocortex begins to rewire itself through synaptic plasticity to store the memory. After many repetitions, the memory is no longer dependent on the hippocampus and it fades away. I think this is the paper I'm recalling this from, but I'm not entirely sure (this memory is several years old): Bontempi, Bruno, et al. "Time-dependent reorganization of brain circuitry underlying long-term memory storage." Nature 400.6745 (1999): 671-675.