The Fear of the Surreal is all about the stuff within our subconscious. Some stories explore it from within, having characters and narratives delve inward (dreams and hallucinations are common motifs in these contexts), while other stories take on a more external approach, having fantastical events happen that may or may not be real but are usually symbolic.
The most popular portrayal of this concept is The Grotesque. Introduced by Topography Genera as Lotophagi, this was a presence in a character's head that distanced her from reality the more she slept. The Grotesque is often used as a device to explore the idea of dreams being unwanted or even unsafe. In the ARG Nine is God, The Grotesque appears in an actor's dream and prompts her to draw the Featured Image, though how it fits into the rest of the game is unknown for the time being!