John Carpenter once stated there are essentially two kinds of horror stories to tell: ones in which the danger is lurking just beyond the campfire, and others in which the source of darkness is inside ourselves. Either one can be effective, and both are worthy of a little further analysis.
Much of what is traditionally considered horror fits into the category of an outside force. The power of this approach relies on on humanity’s basest fear: the unknown. It’s not the form of the beast stalking those campers that makes it terrifying, it’s the fact that the creature exists so outside the realm of everyday experience. Without knowledge of the threat, there is no precedent for understanding it, let alone defeating it. Worse, it opens up a realm of unpleasant possibilities. Because if this aberration exists, what others might be waiting in the dark?
The internal threat represents a more subtle approach, but the effect is every bit as visceral. Instead of the outright dread that comes with the B-movie monster, this method relies on paranoia. This time, the danger isn’t shying away from the campfire’s light; it’s warming its hands over the flames. A human face is the monster’s camouflage, be it serial killer or body snatcher. It can walk through a crowded shopping center without anyone raising an eyebrow, its true nature obscured until the moment of attack. Here, there is no rush of relief from closing the book or switching off the TV. Every human face is that of the monster.
There are any number of directions these two approaches can go, but the foundation of a horror story is always one or the other. Neither is inherently superior. Both have been done well and poorly. As always, it is up to the writer to master the execution.