One of the new features in Android 4.2 is a screensaver called “Daydream”. On some Nexus 4 models the feature will not work, even with the Daydream feature “On” and a theme selected. This is because the phone is set to never sleep while charging, by default. In order to activate Daydream, one must turn this “never sleep” setting off. Here is how:
Enable Developer Options by going to Settings | About Phone. Repeatedly tap and long press on the Build Number section until you unlock the Developer Options.
Go to Settings | Developer Options and deselect “Stay Awake”.
This should enable proper behavior with the Daydream feature on a Nexus 4.