Tom Morton’s review published on Letterboxd:
I found a lot to like about the second film, but this one is a HUGE step up - from the credits sequence (in which we're introduced to Patricia Arquette, washing a dry spoonful of instant coffee down with coke while building a papier maché nightmare house) on in, it's full of great ideas that expand and deepen the Nightmare world.
I loved the bunch of mixed-up kids that we get as our protagonists this time - consigned to a mental hospital for their "shared psychosis", they're forced to look out for each other at night, since the staff refuse to believe that their bad dreams could be anything more than a symptom of something else, rather than a danger in themselves. The return of Heather Langenkamp as the one person who could possibly understand what they're going through, is genius (and the fact that her return is also an excuse to bring John Saxon back in is a bonus - I love that guy).
With Freddy's intended victims able to team up, they also discover that they have powers in their dreams that they don't in real life - this is another neat twist that occasionally adds a weirdly saccharine edge to proceedings and twists things a little away from horror into fantasy... but never really in a bad way. I was certainly charmed by Freddy Krueger facing off against a boy wizard, for example.
The great cast, some classy music from Angelo Badalamenti (and Dokken!) and more excellent special effects make this possibly the best of the series so far; the original might be a little more consistent (and gorier) but this one takes so many odd little turns without ever losing that Nightmare feel. Really great.