Aside from creepypasta-eyes Mario I don't see the nightmare fuel here.
I guess it's the fact that Mario is actually Doopliss, the group being unaware that their friend has been replaced by a doppelganger. Another potential factor would be the fact that they're eating a pig, something the people of the town got turned into by Doopliss, implying that they're eating a person, and also the fact that the mayor is just watching while they do so.
I still don't think she's "sexy" really. She has too much bubbly little sister energy for me to see her that way. But I'll say that Hologra did move the needle...
Edit: Also, adding this to the Current Events pool because this depicts the Bridge Fire that started a week ago on September 8, 2024. It's in Los Angeles and San Bernardino counties, Southern California, United States.