Other mistake: If Freddy's powerless in the real world then how does he briefly make his face look normal in the fight against his daughter?
Plot hole: The pipe bomb that Maggie uses to kill Freddy is the same one that was found in Spencer's room earlier in the film. It's already been established that Freddy was erasing the people he's been killing from existence, so that pipe bomb wouldn't be there to use on Freddy.
Continuity mistake: When Maggie stabs Freddy with the glove, in one shot she has her tied hair down over her jumper, but in the next shot it is above her jumper, and tied higher.
Answer: In the book version of the first three movies, he took a saying from his abusive foster father: "Children are useless." He made it "Children are better off dead." He also killed one trying to rob him and felt a rush of adrenaline from it that he didn't want to lose, so he got addicted to killing.
Rob245