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To sleep on it means to take some time and think things over. Usually said before a decision needs to be made. And yes, it is literal. The person who says this is asking for an answer the following day.

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2011-04-18 04:10:35
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2008-10-26 18:13:08

The idiom "sleep on it" means to think about something someone has told/asked you before you make a decision about it.

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Q: What is the idiom meaning of 'sleep on it'?
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