Very Well Made Horror Game
The first thing you notice when you start the game is that you appear to have amnesia. You don't remember who you are or what you've been doing, but you do know that you need to kill a man named Alexander. You have left yourself a series of notes throughout the game, and these serve to provide some information about who you are and what you need to do. A primary game mechanic is that of sanity, which is expressed not in a traditional meter but in how the character perceives the world (including both sights and sounds). As your sanity erodes, you will notices the screen slant and the picture wave, and hear increasingly bizarre sounds and voices. If you don't regain sanity soon enough you can even die this way. The game has a few other tricks that I won't spoil here, but it's not really anything more than what Eternal Darkness did close to 10 years ago.
The game is poorly lit, and when you stand in the dark your sanity will start to fade. To combat this, you have a lantern (fueled by oil that you can find from time to time) and you pick up flint that can be used to light torches and candles scattered liberally throughout the game. I found that I ended up with far more of these than I needed, but there is still a sense that you have to be frugal with these items. As a result the game can be quite dark throughout.
The puzzles, much like in Penumbra, are well thought out and not fucking ridiculous like in some "classic" adventure game series. Old Man Murray had a great take on adventure games at one point (link here). I never found a required solution to a puzzle to be absurd. I realize this isn't a very high bar to get over, but since this seems to be a problem in some franchises I think Frictional deserves at least some credit on this point.
The monsters, while only coming in a couple of flavors of more or less the same creature, should be sufficiently terrifying to put some real fear into you. They are freakish, horrible looking abominations, and by the time you see them your screen should be at least somewhat blurred from the game's insanity effects. This actually has the effect of making the monsters more terrifying than they would otherwise seem.
All the above being true, Amnesia isn't a perfect game. It's fairly short; I think I managed to beat it in less than 10 hours, and I suspect it could be completed in half that time if one were to follow a walkthrough closely. Also, the story starts to fray a little the more you think about it. For instance, for what purpose (other than a convenient way to deliver the story in bite size pieces, one note at a time) does Daniel give himself amnesia? And what is the nature of the creeping horror chasing Daniel and Alexander? Where does the portal at the end of the game lead? Why doesn't Alexander kill Daniel when he has the chance? All of these, though, are questions that you'll probably only find yourself asking after you've completed the game. During my playthrough, I found myself engrossed in the story, and I couldn't wait to read the next note. Also, part of the horror in the game (and a substantial part of the horror used by H.P. Lovecraft in his stories) lie in what ISN'T shown or told. The human mind is very capable of filling in the gaps, and Frictional Games did very well in creating the outlines of a story that your mind should be able to fill in with more horror than would be provided in a fully explained story.
One final, minor, complaint: the game autosaves for you very regularly, which functionally makes it so that there is very little penalty for dying. This can make the monsters a bit less frightening and can reduce immersion in the story a bit. I thought the impact of death in Penumbra to be a bit better, but I can certainly understand why Frictional chose to go down this path. It's generally no fun to repeat parts in an adventure game.
So all in all, I highly recommend this game. It's well worth the price point (last I checked, around $20) for the content provided, and the developer has released its tools to the public, so there may well be additional free content provided in the future.