If you want to use a Lovecraftian Ravenloft domain ability, express it as supernatural influence, but get the player's buy-in first. Because the region might be gloomy, depressing and creepy as hell but it's up to the player to determine how they're going to react. PCs are not normal people, they've likely been around the block a time or two and seen dangers most people never have. Even with normal people there will be some that are quite analytical and would simply dismiss it as illusion. Some people just aren't affected by haunted houses, even when they're an entire realm. Personally? I have to decide to be in the mood to be affected by it, there have been times when I was simply not in the mood for spooky and it wasn't. There may be the occasional jerk or reflex reaction that's hard wired into most people, but that doesn't mean their mental state is altered.
I see a very clear default line in D&D that doesn't necessarily exist in other games - the DM controls the world and the players control their PC. That contract and assumption can be modified of course, but it takes buy-in from the entire group. While it may or may not be that an idealized tough-as-nails-never-react persona is not realistic, when is D&D ever cared a great deal about being realistic?