Okay, so this is probably going to be very complicated, so if you have any follow-up questions to what I'm going to say please just ask away.
First of all, I'd like to say that pretty much everything is structured in a way to give you as much creative freedom as possible. The initial idea for this RP is "a battle Colosseum for horror stuff" and I wanted to make it so anybody could make anything that fit without worrying about what other people already did that may be similar.
Terra Mortis is an "alternate world", so I'd say its probably more of an alternate universe. It basically exists off the fear and nightmares of mankind, which is simply a power source for it to exist. Have you ever played or at least heard of Kingdom Hearts? That's essentially how Terra Mortis works. It's not so much a single world as it is a collection of pocket dimensions varying in size. So really, it's a world of many smaller worlds, and each of these worlds can be thought of as "horror movies". What I mean by that is that usually each planet is specifically geared towards one story or Horror. One world can be nothing but a castle haunted by a vampire, another world can be exactly like Earth, where the denizens of the world think its Earth, and it's dealing with a zombie apocalypse. There are usually a very small amount of actual Horrors per world, there are actually A LOT of worlds with just one as a matter of fact.
The worlds of Terra Mortis can fit into three categories: worlds which are not aware of the other worlds and don't even know they are part of a grander scheme called "Terra Mortis", worlds which are aware of other worlds and MAY know they are part of Terra Mortis but don't know how to travel to other worlds, and finally, worlds that are aware they are part of Terra Mortis and know how to freely travel between worlds. Typically, the last category of world usually has many Horrors living in them due to the tendency for worlds like them to be connected to hundreds or even thousands of other worlds.
Finally, there's the travel between worlds, which is simply calls "The Mists". The Mists tend to show up randomly in worlds, and anyone who walks into them will be sent to another world. The third category of world knows how to summon these Mists and control them so they can be used to travel anywhere.
Short answer: Terra Mortis is really just a collection of worlds where terrible stuff happens. Some worlds know what they are, some don't. Really, they're just an excuse for anything to happen.