Physiologically, what is happening when our eyes get all puffy?
Amateuristic explanation:
In my experience it is related with the building up of fluids in your body = the working of your kidneys with as result (too) much urine in your blatter when you dinkr much (not meaning “alcohol” but any kind of fluid)before going to bed.
I’m sure there is a more profesional explanaition coming 
Salaam. A
There are many root causes but it all comes down to tome noxious stimulus. Allergies cause puffy eyelids in many folks, but other causes abound.
Different parts of the body react differently to the same stimulus. In the case of allergies, the nose runs, the eyes tear, but the eyelids swell. All three reactions result, at least in part, from increased fluid leakage from blood vessels. The eyelids are so delicate and thin, that a little extra fluid goes a long way.