So when people wake up from nightmares and feel scared, then switch on their lights because they're still afraid, what is happening?

Once you get up, you know the nightmare was not real. Rationally, you shouldn't be afraid. But when the hell has it been a rule that rationality will always trump emotion? If the fear you felt during the nightmare is strong enough, the realization that it was a dream won't make the fear go away. You need to switch on the light, drink water, maybe talk to someone you trust, all so that you can soothe the fear, and then you laugh at yourself for letting a dream affect you in this way.

The archways seem worse. Not only do they make you feel strong emotions, you come out remembering in vivid detail what you saw there. You left your husband and child helpless? You're going to cry about it, no matter the fact that it wasn't real. You have a very realistic simulation of such an event lodged in your memory. That will trigger the same emotional response as the real actual event. That's the whole basis of dreaming and feeling emotions based on events in books and movies!