Animated with a style influenced by Edward Gorey, Neverending Nightmares was a DIA made to give the experience of having a mental illness to the player to promote awareness of those suffering with it (as made clear from a message in the end credits).
The impact of playing the game illustrates this: players can become nauseous in response to the pervasive dark ambient noises, gruesome violence, and depressing settings they are forced to go through for...really, no reason.
So comes Neverending Nightmares's biggest problem: the whole thing's message is plainly given to us, so there's no imaginary space for the player to find or rationalize to create a personal connection with the experience.
Survival horror DIAs usually characterize your player-character in a way that's relatable to dodge this problem from the start, but here, our protagonist is hardly known: he is young and he loves this girl-child character we see now and then, but that is all we have to tell about him. And the levels are linear, so the player can't input their own personality to him with their own behavior and choices, like say, Gordon Freeman. (see Half-Life)
This underdevelopment of character furthermore cuts off any ideas of symbolism or any deep meanings to any of the nightmares the player faces. Ergo, the nightmares are an entirely superficial series of tropes we've already seen in the horror genre (be it novel or film or video game) like evil dolls, mental hospitals, hiding from monsters, and so on, all emphasized with buckets of blood and the aforementioned dark ambiance.
The familiar batch of scare tactics may be irksome to gamers who are survival-horror veterans, but it should be said that the scares in the experience are at least delivered well in the sense of creating a state of mind and/or atmosphere. The disturbing sights and sounds from Neverending Nightmares can brusquely be labeled as gross and tasteless, but perhaps the unpleasant and ugly approach of showing these things was the makers' genuine intention: after all, wouldn't you probably also call the visions of one's own diseased crazy mind gross and tasteless?
Alas, this point fails to defend the idea of how much better of an experience this DIA would have been if they had chosen to convey a more creative and personal set of nightmares rather than implementing all the generic ideas of what's "scary".