Freddy Krueger: I'll kill you slow!
Marge Thompson: You want to know who Fred Krueger was? He was a filthy child murderer who killed at least twenty kids in the neighborhood. Kids we all knew. It drove us crazy when we didn't know who it was, but it was even worse after they caught him.
Nancy Thompson: Didn't they put him away?
Marge Thompson: The lawyers got fat and the judge got famous, but somebody forgot to sign the search warrant in the right place. Krueger was free just like that!
Nancy Thompson: What did you do, Mother?
Marge Thompson: A bunch of us parents tracked him down after they let him out. We found him in an old abandoned boiler room where he used to take his kids.
Nancy Thompson: Go on.
Marge Thompson: We took gasoline, poured it all around the place, made a trail of it out the door, then lit the whole thing up and watched it burn. He can't get you now. He's dead honey, because Mommy killed him. I even took his knives. So it's OK now. You can sleep.
Answer: 1. Freddy is the ghost of a child killer, he is very difficult to be rid of. He did not die at the end of this film. 2. It is possible to bring items and even people in and out of the dream world. Although it is never explained in detail how. 3. It was a dream, but as seen in the film, that's not a good thing.
MasterOfAll