Is it preferable to inform the person seen in a dream about the state in which they were seen, whether distressed or otherwise, and what is the wisdom behind seeing people's states in dreams?

We have no definitive knowledge regarding the wisdom behind your dream. However, if the dream is a glad tiding, it is good to inform the person about it. But if it is not a glad tiding, do not speak of it, because the general principle is not to disclose bad dreams, lest they be interpreted in a disliked way. Indeed, it is narrated in Sahih Muslim that the Prophet, peace and blessings be upon him, said: "A good dream is from Allah, and a bad dream is from Shaytan. So if one of you sees a dream that he dislikes, let him spit to his left and seek refuge with Allah from Shaytan, and it will not harm him, and let him not tell anyone about it. If he sees a good dream, let him be glad, and let him not tell anyone except one whom he loves." Al-Nawawi explained this by saying that disclosing a disliked dream might lead to its interpretation in a disliked way, which could then occur by the decree of Allah the Almighty.