People sleep once the game is closed, and they need about 8 or more hours to feel fully rested, just like we do. When the game is open, they can't sleep (think of the game being open like a very strong light in your eyes - you wouldn't be able to sleep either!
) What I like to do is have my peeps sleep at night, around the same time I do (game closed). When I get up in the morning, they are awake and ready to go too!