They thought that Jesus was talking about actual sleep, but He was speaking about the death of Lazarus.
Εἰρήκει δὲ ὁ Ἰησοῦς περὶ τοῦ θανάτου αὐτοῦ· ἐκεῖνοι δὲ ἔδοξαν ὅτι περὶ τῆς κοιμήσεως τοῦ ὕπνου λέγει.