1. The reason behind the restrictions: [1]
Impurity resides on body: The Sages stated that upon sleeping for sixty breaths[2] at night the G-dly soul of every Jew ascends from the body and a spirit of impurity [which is called Shibsa and Bas Melech[3]] then resides on the body. When the person awakens and the [soul returns to the body[4]] the impurity immediately leaves the entire body and remains only on the hands, until he proceeds to wash them properly. [This spirit of impurity which resides on the hands upon awakening is mentioned both by the Zohar and the Talmud, and due to it, there are restrictions given as to what may be done prior to removing this impurity through washing hands.[5]]
[1] Kama 4:4
Basra 4:2: Upon sleeping the G-dly soul ascends from the body and a spirit of impurity then resides on the body. When the soul returns to the body the impurity leaves the entire body and remains only on the hands.
When at night does the evil spirit reside on the body? Some write that the evil spirit only resides on one’s body if he is sleeping by midnight. Hence if he awoke before midnight or went to sleep after midnight the below mentioned restrictions would not apply. [Divrei Shalom 48, grandson of Rashash in name of Rashash, brought in Kaf Hachaim 4:4 and 52; Shulchan Hatahor 4:10] Practically the Poskim do not differentiate in this matter and the restrictions apply in all cases that one slept at night. [Piskeiy Teshuvos 1:6]
Other Opinions regarding Ruach Raah: Some rule that today there is no more Ruach Raah and hence one is not required to wash his hands three times in the morning. [See Lechem Mishnah in his explanation of Rambam Hilchos Shevisas Asor 3:2; Rashal in Yam Shel Shlomo Chulin 88; Mahram Chaviv Yuma 44b]
[2] Regarding the length of sixty breaths see Chapter 4 Halacha 17 Q&A; Regarding if the spirit of impurity resides even if one sleeps only a temporary sleep see Halacha 6 Q&A.
[3] Gemara Shabbos 108b; Kaf Hachaim 4:6
[4] Basra 4:2
[5] Basra 4:1 and 2