“Night Terrors” take place outside REM sleep unlike nightmares which take place during it.
From the NHS
Nightmares are quite common. They often begin between the ages of 18 months and three years. Nightmares aren’t usually a sign of emotional disturbance. They may happen if your child is anxious about something or has been frightened by a TV programme or story. After a nightmare, your child will need comfort and reassurance. If your child has a lot of nightmares and you don’t know why, talk to your GP or health visitor.
Night terrors
These can start before the age of one, but are most common in three and four-year-olds. Usually, the child will scream or start thrashing around while they’re still asleep. They usually happen after the child has been asleep for a couple of hours. They may sit up and talk or look terrified while they’re still asleep. Night terrors aren’t usually a sign of any serious problems, and your child will eventually grow out of them.
Don’t wake your child during a night terror. But if they’re happening at the same time each night, try breaking the pattern by gently waking your child about 15 minutes beforehand. Keep them awake for a few minutes, then let them go back to sleep. They won’t remember anything in the morning. Seeing your child have a night terror can be very upsetting, but they’re not dangerous and won’t have any lasting effects.
Seeing it for the first time is quite alarming!