Accidental Nightmare Fuel refers to things in media that scare people even though they were never meant to. Something that was meant to amuse or entertain to the audience would otherwise result in frightening people to the point of having nightmares. It's particularly common in media aimed at children and general audiences, as kids (usually) get scared more easily than adults, but can be seen pretty much anywhere by anyone, due to the extremely subjective nature of horror.
In short: It wasn't intended to be scary, but it turns out to be anyway.
The usual suspects of Accidental Nightmare Fuel include:
Puppet, animatronic, claymation, or CG characters who were meant to be cute, but who instead look like they crawled out from the darkest depths of the Uncanny Valley.