A. could have a sleep disorder which allows part of his brain to be awake while part is still asleep and expereinceing a dream. Basically it could give him an overlay visually of objects or scenery from his dream right on top of real images of his own bedroom he is seeing with his eyes open. Sounds nutty but, it can happen.
B. He is just thinking about something (possibly from a dream) after waking up and can't get the giggles to go away as he thinks about it. All the while he is still trying to pay attention to what you're asking him. it would make sense that he wouldn't look AT you while this is happening.
C. He could very well still be asleep and able to open his eyes and answer questions. Some people are very suggestable while asleep. You can provoke them to move around or speak while still asleep and all the while still having a dream! A friend and I used to mess with another friend back in school when we'd have sleep overs. Our friend would start talking and mumbling in her sleep at which point we could get her to talk to us and answer questions. kinda fun.
D. some other neurological issue related to sleep patterns and improper balance of bodily enzyme reaction and chemical release that almost gives him some sort of natural high (making him extremely happy and a little loopy thus the staring into nowhere). This would subside as he wakes more fully than dissappear until he goes through the levels of sleep once again.
ok, it gets weird from here on out
E. He see spirits or some other entity that you cannot as people are more apt to be able to when falling asleep or waking. Maybe one he is seeing likes to entertain him. As he wakes more fully so does his rational center of the brain (although our so-called "rational" center really isn't much for knowledgable) causing the very real things he was seeing to dissappear as his brain tells him they could not be real therefor aren't there.
F. Look up astral travel. I don't know much about children and astral travel. Apparently it takes some training and focus for adults to make this happen but, perhaps it's natural to us as children and we simply loose the ability as that silly rational side talks us out of it permenatly. Astral Travel is basically the act of traveling in spirit or mind (your physical self stays put) to other plains of existance (wether it be different time periods, locations, or completely different plains of existance). He could be waking from these travels other than smoothly and again be expereincing an overlay of one existance (the one he just visited) and his own for a moment upon waking, until it eventually fades (probably within a minute I imagine but, could be slightly longer).
G. He could have the ability to see energy. Maybe the chemical reaction we all have during sleep allows him to do so while during the middle of the day he cannot. Who the heck knows what sort of energy matter and energy itself gives off. There are so many things that our brain interprets as distraction and simply does not allow us to see (although we can train ourselves to do so with the right intention and effort). Maybe you son wakes to see fun colors filling the room, big balls of energy, or shiney particles shooting around. Idk?
Either way, at least he is happy! When dd wakes in the middle of the night it is screams and her desperatly yelling "mommy! daddy!". When she was younger she would wake in the middle of the night, play around in her room and giggle and laugh the entire time. it progressed from there and I won't go into detail but, it was very enlightening for dh and I. I wish I could have those days back when she woke with giggles!