The Freddy Krueger cartoon is moderately funny. It combines elements of horror and humor in a unique way. Some of the character's expressions and actions are quite amusing.
After being killed by the angry parents, Freddy Krueger's malevolent spirit found a way to exist in the dream world. His horrible death and his already evil nature made him a perfect candidate to become a nightmare figure. His presence in the dream world is a form of revenge against those who killed him and also a way to continue his killing spree in a different realm.
He could fall in love with a fellow dream entity. Maybe there's a beautiful and mysterious being in the dream world who catches his eye. This being could be like him, having some power over dreams, and they start to bond over their shared abilities.
Freddy Krueger's story goes like this. He was a child murderer who was burned alive by the parents of his victims. Now, as a supernatural entity, he seeks revenge by entering people's dreams and causing their deaths.
Definitely not. Freddy Krueger is purely a creation of imagination for the purpose of scaring and entertaining in the realm of horror fiction. There's no real-life basis for such a character or the events associated with him.