#1: FEAR OF THE UNKNOWN:
It's not till the 3rd act that we learn who Freddy was, and why he was after them.. Till than, he's just a scary monster that stalks our dreams, and never explains why..


#2: FEAR ITSELF:
When thinking of a nightmare throughout the day, you give it power, and because of this, you are more likely to have that nightmare again. That's basically the idea of the movie.
Not just that there's a burned guy after you, but the fact that your fear is making him powerful only makes it scarier, striking more fear. It's a vicious cycle.
Not to mention Freddy knows what scares you, and being the troll he is. He will use this to kill you more "creatively"..


#3: HIS SADISTIC JOY IN THIS:
Freddy is have a blast stalking and killing you. And that makes it all the more scary..


#4: BEING A TEEN:
It's the adults who won't believe that he's returned. There's an inherent disconnect in the film (and in many horror films) between the world of children, teens, and adults. As children, we are innocent - and either victims or saviors, and we can believe in anything. As teens, we are no longer innocent, so we suffer for our wrongdoings; but we are not yet adults, so we cannot be trusted or believed. And, finally, as adults, we are concerned with the "real" world, and simply cannot believe in any of the "foolish superstitions" of our childhood or teenage years.


#5: IT'S IN YOUR DREAMS:
The place we fear the most safe..