I'm going to be brief and to the point:
Horror is personal. That right there is the big secret about the horror genre in all forms of media. That's why there are so many different takes on it, because each person has a different set of buttons to push in order to make them feel scared.
Some people aren't afraid of something they can actually see (which is why they praise older movies, where special effects required shots not to linger too much on the gore or monsters, or literature, where it's all in your imagination). Some people aren't afraid of movies and books, because they are passive spectators and don't get that invested in the characters (they experience the horror as a diffused, distant emotion), but become terrified with the interactivity of a videogame. Some people, like me, aren't afraid of the Everyone Can (and Will) Die trope. On the contrary, it absolutely kills horror for me and sends me straight into apathy (if everyone is going to die, why should I care about anything?).
You can't have one formula for doing horror right, just like you can't have one formula for anything. Instead of trying to oversimplify something that is inherently complex, we should instead celebrate all the different takes on horror, in all its different media, as different experiences with the same goal. Some people like the atmosphere and jump scares and want an immortal protagonist so that they can continue to enjoy the atmosphere and jump scares. Others couldn't care less about that and want a fallible protagonist so that they can feel invested in the threat. Both are incompatible, yet both are perfectly valid takes on horror. Just because I find the latter depressing instead of horrifying doesn't mean I have the ultimate say on what horror is.
Because horror is personal.
EDIT:
This is a great example of how different horror can be from person to person.
Kopikatsu said:
2. Everything is explained to you. You come to know what the monsters are, who Alexander is, and even what Daniel once was. There is no mystery or sense of the unknown, because it's all laid out for you.
This drives me insane. When a game presents me with questions, I expect them to be answered. I absolutely cannot stomach the idea that unsolved mysteries are good. No. Just no. Mysteries are there to be solved. Unsolved mysteries aren't scary at all, they are extremely irritating (to me).
Kopikatsu said:
3. No matter how hopeless a situation seems, there is always a solution. Daniel is like some kind of Terminator that absolutely cannot be stopped, whether through gameplay or the narrative, only inconvenienced.
Isn't a book or a movie exactly like that, too? I mean, a videogame can kill off a main character and jump to another with the same ease as a movie or a book (meaning: it's not done lightly). This isn't a problem of videogames, every movie and book is also a tale of a fated protagonist (because the book/script has been written, and so their journey has been fated).
It's also irrelevant, because if a character fails, they fail because the author deemed it so: it was fated, regardless of the media. Isn't a character dying in a cutscene or to an impossible enemy just as arbitrary as them overcoming every obstacle before that? I'll answer that for you: yes, it is. If you are going to get metaphysical on the metatextuality of entertainment media, be prepared to go all the way. Success and failure are exactly the same and indistinguishable once a story has been written, and depend only on the eyes of the beholder. Without going too far, and avoiding spoilers: the ending to The Cabin in the Woods. Failure? Success? It's entirely subjective.
No character is ever truly fallible. All will do what they are meant to do; only that, and nothing more. I, personally, prefer stories where they are meant to succeed, rather than fail. If I wanted stories of fallible people who met their ends in a scary or tragic manner, I'd watch the news.