To ensure that the function $f(x)$ decreases for all real $x$, the derivative of $f(x)$ must be negative for all $x$.
\[
f'(x) = \cos x + \sin x - \lambda
\]
For $f'(x) \leq 0$ for all $x$, we need the maximum value of $\cos x + \sin x$ to be less than or equal to $\lambda$.
The maximum value of $\cos x + \sin x$ is $\sqrt{2}$, so:
\[
\lambda \geq \sqrt{2}
\]
Thus, the correct range of $\lambda$ is $1<\lambda<\sqrt{2}$.