Who Also Does this...?

[Kreekakon]

With that said, I don't really follow your logic... As I see it, if they are able to defy their fear by running into the monster instead of away from it, then from my point of view, they are not scared enough. Why would they then be more scared if they hide?

Eh, whatever...

It's because in Amnesia, you're supposed to be put into the shoes of Daniel. What would YOU do if you were Daniel in the case that he met a monster? I'd suppose that he would hide. Imagining yourself in Daniel's shoes, and doing what he would offers more immersion in the game, and ultimately grants more tension, because you are thinking like Daniel. Running into monsters will break that feeling, and immersion, reverting the player back to the full consciousness that they are nothing, but a person playing a video game, and causing much less emotion from playing the game.