Palladium Books has three horror games in their catalog. The oldest of the three, and the only one to have a second edition, is Beyond The Supernatural. This game came out before the monster-as-hero picked up steam in film and television, and just started to get steam in comics, so it's best taken as being inspired by the horror films of the 70s and 80s. Player-accessible supernatural powers are limited to spell-casting and psychic powers; this game did Buffy the Vampire Slayer well before the TV series (and certainly before the licensed tabletop RPG).
This is a pre-RIFTS game, and it's meant to use the real world as its setting, so the craziness commonly associated with Palladium's games is a bit muted here, but if there is any movie that captures how the game actually feels in practice then go watch Cabin in the Woods. For a game meant to be low-key, the actual disparity of power required for a good horror scenario is often lacking out of the box; it takes a confident Game Master to make it work, something that too many lack.
When done right, you get the experience of a Hammer Horror film featuring competent protagonists. When done wrong, you get satire like Blackula. But there is another option, and that's the option that made this game stand out: the Victim rules. By default, the game doesn't do Slasher Films well; the Victim rules fix this, allowing players to be truly hapless and helpless before the horror they face, and forcing the players to be just as resourceful (and reliant on luck) as the stupid teenagers and co-eds of the films this option emulates. It has its fans, but most horror gamers stick to Call of Cthulhu in general or to another competitor for something more specific.
Palladium has a habit of chasing instead of setting trends. Nightbane is definitely a trend-chaser game, and it's meant to compete with The World of Darkness and other "hidden monster underworld" sorts of settings. As such this horror game veered into "Urban Fantasy" and "Dark Fantasy" at times, given that players are meant to play characters whose powers require a monstrous form. As with the above game, it has its fans, but most would rather play Vampire or Werewolf than this game to get their fix.
This is unfortunate. The setting has potential for a true old-school wargame-inspired campaign, starting with the players in the roles of partisans against the alien occupation (which is what this game's setting really is) and branching out as their efforts result in continued escalation of their guerilla warfare to greater scopes and scales. However, Palladium games are not known for being good at presenting anything but '80s-style action/adventure, so most players don't even try anything else even when they ought to know better.
Palladium chasing trends showed up against with their zombie apocalypse game: Dead Reign. The designers wisely did not specify what the cause the zombies are, and made the mechanics for Spreading The Love simple and generic enough that all of the varieties of walking corpse presented work without overthinking things. The setting, as presented, isn't the relentless nihilism of The Walking Dead, but it does leave heroism up to the users and not dictated by the game. (That said, it's a sheer vertical climb up out of the pit of despair; see the TV Tropes page.)
What makes this game interesting--and allows it to compete well against its more popular rival, All Flesh Must Be Eaten--is the sheer number of zombie variations presented. That has to be a big factor it to being a sleeper hit, especially now that Eden Studios (publisher of All Flesh Must Be Eaten has followed many of Palladium's rivals into the shitter. (Eden's technically still around, but it's all but a ghost of itself now.) It has appeal, therefore, to Resident Evil and Left 4 Dead fans; special undead spice up the common gameplay experience and having plenty of go-to zombies in the books ala D&D's Monster Manuals makes it easy for Game Masters to stock up a scenario without having to do a lot of work. The result is that play tends to resemble those two games and not Romero's original zombie films (or Kirkman's comic).
There are several take-aways here. The first just slapping on a "Horror Factor" that players must save against does not make a horror game for most players. It's taken as a tedious bitchwork mechanic to work around because the player isn't feeling the horror, which is what a successful horror comic, novel, series, film, or game has to accomplish to be effective as horror. (Yes, this is true of Call of Cthulhu also.) The second is that horror is a state of mind in the audience; there is no game mechanics that can produce the effect, so stop trying. The third is that most gamers don't do horror, even if they say they do, because what they really mean is "I can do this scenario the smart way, not like the morons in the movies." so give it to them- give it to them good and hard. They'll love you for it, even if they fail. They want Survival Horror. Make them survive to win.
Palladium's ruleset is terrible for most horror, but it can do Survival Horror all day every day, and that's why these games got and kept their audience. When I get around to RIFTS, we'll come back to this point.