Here is some information on night terrors and nightmares from eat-sleep-love: Dealing with Nightmares and Night Terrors
Does your child experience nightmares or night terrors? Do you know the difference between the two and the causes for each? Night terrors are characterized by loud and intense crying our screaming that usually happen during non-REM sleep, in the early parts of the evening (generally within 1-3 hours after going to sleep). During a night terror, your child is not actually awake, and will not remember what is happening. A child having a night terror may be screaming or talking or calling out, but they do not seem to be fully there or recognize you. When a child is experiencing a night terror, it is actually best NOT to touch them or pick them up - it can make the night terror more intense. Instead, calmly sit with your child, offer some very soft vocal comfort if you feel it helps. It should resolve on its own, and your child will return to sleep faster if not disturbed during the terror. Remember - the terror is scarier for you - your child is not aware it is happening and will not remember in the morning! Night terrors are most often caused by scheduling issues - insufficient daytime sleep, too late a bedtime, or too much time from the end of the last nap until bedtime.
Unlike night terrors, nightmares happen during REM sleep, more often in the middle of the night/early hours of the morning. They tend to happen more frequently as children develop creatively and can articulate their thoughts and fantasies. Children will usually wake and express their fears/concerns, and will remember what is scaring them. They do recognize parents when we respond to them. Nightmares can be caused by insufficient daytime sleep or too late of a bedtime, and occasionally by foods we eat. Anxieties, and simple stories or things children hear or see may lead to nightmares, as may life stressors. To address nightmares, help your child feel secure and empowered. Often, giving them a way to express their fears or protect themselves from their bad thoughts can help!