I saw this one in the theater back when it came out in 1989 and I really liked it. I don't normally like horror at all and granted this is not that type of formula.
For me I think the key element is that the story is from the kids point of view and the cinematography- the camera angles that give you the feeling that you are not in control or confused but everyone acts like it's fine. The music is quirky and slightly off but not too over the top. The red emphasis in certain scenes and in the dreams has an "m shamalam" vibe.
While it wasn't anyone else's favorite that I knew, I remember parts of it perfectly from one showing. 23 years later I convinced my husband to watch it on Halloween. Timeless quality and I still really like it!