These dramatic, terrorizing dreams aren't nightmares. Where, how and why do they occur?
Night terrors generally occur at the start of the night during deep sleep, the most profound phase of non-REM sleep. This is a phase with reduced brain activity.
Your child shouts, gets up, is restless, babbles, seems to be gripped by a hallucination (he may try to catch something or escape, etc). He may sweat and hyperventilate. His eyes are open but he can't see you. He can hear you and even respond to you, but he is still asleep and you can't wake him.
Your child's brain is still immature and night terrors arise in some children from this neurological immaturity. Such displays are quite similar to episodes of sleepwalking which affect some children. In reality, only a part of the brain is "awake", while sleep continues. This can be frightening for the rest of the family.
How should I react?
Calmy and gently, speak to him quietly and place your hand on him. Sometimes simple physical contact will be enough to calm him down. Stay close until you hear his breathing return to normal, which is a sign that he's gone back to sleep. If the night terror episodes become frequent, consult your doctor. And speak to your child: perhaps there is a worry or problem behind his night terrors which he won't remember in the morning (unlike dreams and nightmares, which are remembered).
Night terrors disappear spontaneously in the majority of cases. As the child grows, the brain matures and the terrors will fade. As far as possible, stick to a regular sleep routine and avoid late nights. A regular suitable bedtime encourages a peaceful and refreshing night's sleep. If your child is still small, let him have an afternoon nap if you can.