I think the first Nightmare on Elm Street was actually very good. It not only blended together several contemporary media reports at the time, relating to a sudden outbreak of SADS amongst a particular demographic, but also a series of local murders which forced Wes Craven to water down the paedophilic element - although this remains strongly hinted at.
The demographic concerned was south east Asian, which explains the presence of the Balinese 'dream skills' story - they get their art and literature from their dreams and disempower any 'monster' they meet by turning their back on it so it disappears.
The whole idea is that the dream bogeyman is real enough to ensure you won't wake up if he catches you, but nebulous enough for the viewer to know he could not have gained a foothold in any teenager who wasn't from a seriously messed up family background to begin with. That's the only way 'Freddy' gains a purchase, which of course begs the question of the psychological element - he's only 'real' and has powers in particular circumstances and these are psychological.
The first, shadowy Freddy in #1 was really sinister - because he remains shadowy and really menacing. After that they camp him up so he becomes a parody of himself - a bit like the trajectory from the still, snake-like, terrifying Dr Lecter of The Silence of the Lambs and his very campy counterpart in Hannibal.
There is, strangely enough, a lot of serious scholarly criticism on the Hannibal Lecter franchise.