The ground of the village is sodden through with the blood of Just Master Elias Coker, sainted in the sight of Karlburgos, consecrated as an honored mentor and servant of the community, and secret disciple of R'Nzmar the Destroyer, to whom he sacrificed some 321 people, mostly children. Nobody knows this.
They know only that children of the village sleep ill.
The horrors done in this place devoted to an evil man - we'll say they RENAMED the village Cokerus - fester within innocence with a persistent histamine itch. It tortures their subconscious, and that subconscious takes animate form thanks to all the fucked up evil magic Coker acquired over the years grounding itself in the nearest element of least resistance. The children sleep, and have dreams, and the children take the forms of those dreams, and in their wakeless slumber they lumber about the town wreaking havoc in their nightmare bodies.
The children of Cokerus awake to devastation around them, death, fire, confusion, and to distrust, scorn, or outright violence from those closest to them, like their parents or guardians. This traumatizes them more. This makes the nightmares worse. More powerful.