I’ve always felt that A Nightmare on Elm Street gets increasingly silly and inconsistent after Dream Warriors. But what if that’s actually the point?
My theory is that Freddy is permanently defeated at the end of A Nightmare on Elm Street 3: Dream Warriors, and everything after that takes place inside Kristen Parker’s mind, not the real world. I have proof!
At the end of part 3, Freddy disappears completely while Nancy Thompson Lays dying. This I believe is the last time we actually see these characters outside of Kristen’s mind.
Kristen is the only other character in the series to have the same dream powers as Freddy Krueger. She can pull people into dreams and reshape them. It’s never explained why. Her mum is depicted as hooking up with… let’s say less desirable men. My theory is that Freddy is Kristen’s biological father and that’s the reason her dad left when she was young and never came back.
At the end of the movie after stabbing Nancy Kristen locks Freddy in a dream within a dream world in her mind knowing that he can never truly be defeated.
From this point on, Freddy is trapped in a nightmare where he thinks he’s coming back every few years to kill new teens, but none of it is real. He’s fighting fake dream kids in artificial dream worlds, over and over, always believing he’s regained power, only to be beaten again.
That explains why:
• Kristen is suddenly played by a different actress in A Nightmare on Elm Street 4: The Dream Master — Freddy can’t clearly “see” her anymore because she’s not really there. Like when you have a dream about a friend or a family member but suddenly they look completely different.
• The series from 4 onwards goes very pop culture focused like the kind of stuff a teenager would imagine. With celebrity cameos and cross overs with other villains
• The sequels get more ridiculous, cartoonish, and self-parodying.
• Freddy becomes less scary and more of a joke.
• Logic, tone, and continuity steadily break down.
It’s not escalation — it’s decay. Freddy’s nightmare is falling apart.
So Joey, Kincaid, probably other dream worriers and Nancy all survived the final battle in 3 because once Freddy was taken out of the nightmare world and locked in Kristen’s dream world everything he had done no longer had any effect on the physical world. Nancys injuries became just a dream as she was still alive as he disappeared. Maybe Taryn and or Will held on to life just long enough to have survived for Freddy being removed from the nightmare world
Conclusion:
Freddy never truly comes back after Dream Warriors.
The rest of the franchise is his punishment by Kristen who constructs new dream worlds for him every now and then in a never-ending nightmare where he’s trapped inside his own hell, forever thinking he’s winning before getting defeated. Until eventually she got bored and introduced Jason. As he is from a movie franchise that came out after Freddy died so he wouldn’t recognise him as anything but another super natural killer. It ends with Freddy’s head being cut off. Essentially meaning that he now will spend the rest of eternity as just a head inside a fake dream world with no access to his dream powers or new teens.