Trivia: In the dream sequence of the asylum where Amanda Krueger is trapped by the hundred maniacs one of the maniacs looks remarkably like Freddy. Presumably this was his biological father. (Of course this man was played by Robert Englund, the actor who plays Freddy)
Trivia: The idea of focusing the story around children and birth was hatched by Executive Producer Sara Risher, who was a new mother at the time, and constantly had her child and its well-being in her mind. The crew decided to build off this, because they felt that the teenagers and 20-somethings who were fans of the original film were beginning to reach the age where they were likely thinking about settling down and having families themselves. Thus, incorporating elements of family and birth into the film would keep the series relevant and special for fans of the earlier entries.
Trivia: The film was rushed into production, appearing in theaters almost exactly one year after the previous film. As a result, director Stephen Hopkins was perpetually rushed during filming and given extremely tight deadlines to meet. The studio executives were so impressed by his ability to handle pressure, that he was immediately offered the chance to direct "Predator 2."
Trivia: During the "Escher" sequence, we briefly see Freddy upside-down, swinging at Alice. Freddy-actor Robert Englund has stated that this shot was the hardest show for him out of the entire "Nightmare on Elm Street" franchise, as hanging upside-down caused him tremendous discomfort due to all of his blood rushing downwards into his head.
Trivia: During production of "Nightmare on Elm Street 3: The Dream Warriors", screenwriter Leslie Bohem pitched the idea of a "Freddy Baby" to the studio. (His pitch involved him telling a pregnant executive to "Imagine Freddy's claws tearing out of your body!") His pitch wasn't used. However, when the idea of centering this film on children and childbirth was decided on, the studio remembered Bohem's pitch and hired him to serve as one of the writers on this project, even going so far as to incorporate a modified version of his idea for "Freddy Baby."
Answer: Her death was from Freddy overfeeding her while in the real world she choked to death.