From Dungeons of Dredmor Wiki
Damage: ( 3 + 0.15 )
Secondary effect: sleep
Nightmare is choking attack that can be triggered by other spells such as Nightmare Curse and Mark of Chthon. The damage from this can be used as a DOT or a minor direct damage effect.
It is a side-effect of spells cast by characters with the Necronomiconomics skill tree, and part of the side effects of eating a Root of T'Char or from firing a Bolt of Squid.