A horror themed race from Kings of War introduced in the second edition supplement Uncharted Empires. They're noteworthy for both their odd fluff and for having a very unique play style for the game. They're intended to represent any horror themed miniatures you want to field that aren't explicitly undead or of a demon nature. Yes, this means they are intended to allow you to field your pumpkin infantry and scarecrow models.
Back in the golden age when the Celestians ruled everything and shit rainbows and money, there was a secretive elven cabal called the Conclave of Heaven. They were doing all this Mist style research into leaving their bodies and going to some kind of spirit world with the help of this Celestial named Oskan who seemed like a pretty fun guy. If you read the fluff in the core book, you already know where this is going.
So the elves are off on this spirit journey to gods know where when Elinathora smashes the Fenulian Mirror that Calisor made for her at the behest of Oskan causing cosmic upheaval everywhere. This in turn caused a massive arcane explosion at the Conclave of Heaven. Every elf in the city had their souls torn from their bodies and scattered across the planes of existence. This helped to fuel Oskan's rebirth as king shit of the Twilight Gods.
These souls coalesced from across time and space over many centuries. When Domivar defeated Oskan and sealed him in the newly created Abyss, he did so by tapping into the energies that power the fabric of reality. The souls of all those scientific minded elves had somehow amassed in this fabric, meaning that their souls not only form the Abyss but also leak out into reality. With a link to Mantica through the Abyss, these souls can become manifest in the world.
Nightstalkers can take physical form in places where extreme emotions like fear, hatred, and pride are present. They no longer have any sense of their past lives, nor do they seem to be capable of independent thought per se. They are capable of organizing into war bands and fighting with some sense of tactics, although they are far more aggressive and unconcerned with personal safety than most races (as reflected in their tabletop rules below).
Interestingly when they take physical form, it can shift and change based on what other races are present. Nightstalkers take the form of the nightmares and fears held by those they are leeching emotional existence from. When facing humans, they may take the form of scarecrows or Eldrazi. When facing orcs, presumably they look like bunnies or some loli girl. Demons probably just see an army of identical looking Samurai Jack and Kaldor Draigo horde units that are on an eternal quest for warp dust. Yes, this also means we're taking the Mantic Games philosophy of fielding your dudes to a logical and canonical extreme.
On the Tabletop
Tactics can be found here: Kings of War/Tactics/Nightstalkers
The big thing that separates Nightstalkers from other armies is that can never have a source of Inspiring in their army. Since this gives units within 6" a re-roll on all failed nerve tests, they seemingly lose out on a critical component of every other army. This isn't exactly the case, however, as they actually get a re-roll on any failed nerve test if they are within 12" of an enemy's source of Inspiring. This means your whole army wants to be as close to enemy heroes as possible, favoring a highly aggressive play style and making your objective seizing units particularly open to enemy attacks.