Lack of sleep doesn't just make you tired. After a while it starts messing with your mind. You lose the ability to concentrate or even hold a train of thought, and before long you even start to hallucinate. Spells like lesser restoration may remove the fatigue but not help with the other effects.
My own house rules for lack of sleep go like this:
If you stay awake for one full night, you must make a Fort save (DC 15) or become fatigued. For each additional night, the save DC increases by +5. Magic can temporarily remove the fatigue, but it comes back eight hours later unless you have slept in the meantime. You do not get a second save when the fatigue returns.
After failing two nightly saves, you become exhausted. Again, magic can help, but only temporarily. Four hours after being cured you become fatigued; four more hours after that, you become exhausted again.
If you fail a third nightly save, the mental effects start. You take a -4 circumstance penalty on Will saves, and on any skill checks that require concentration or patience. Each round you are in combat, you must make a Will save (DC 10 + 1 per sleepless night) or act as if confused. In addition, you must make a Fort save (DC 15) once per hour, or fall asleep despite your intention to stay awake. Being immune to fatigue, as from the Horizon Walker ability, does not prevent you from suffering these effects. Magic also does not help here unless specifically designed to remove or lessen your sleep requirement.
If you get 4 hours of sleep in a 24-hour period, you must still make the nightly save, but its DC does not increase that day. If you get 8 hours of sleep, you move to the next less-serious step of the scale, and you need not save that night. (However, the save DC does not reset.)
Once you have had sufficient sleep for the same number of nights that you went sleepless, or have spent one entire day resting, the DC counter resets and you're fully back to normal.
