The nightmare-traps seem to be a fairly common instance of folklore across
modern Lost Lands cultures, the idea being that they're to be hung near
one's head while sleeping in order to trap nightmares attempting to enter
into the sleeper's mind. While several sources claim their origins can be
traced back to Huecatn legends, historians specializing in Huecatn culture
dispute this idea.
Further research into the origins of the nightmare-traps has led to the
observation that the items are remarkably common in the small mining town
of Shadgard, though what this might mean is not readily apparent - the
nightmare-traps seem to be a tradition older than Shadgard itself, and
there is no record of anyone in that town recalling how or when the objects
became so popular there.
While researching the origin of the nightmare-traps and early Shadgard
history, you happen across an obscure footnote mentioning an early Shadgard
settler by the name of Benjamin Avery, one of the few people (if not the
only one) on speaking terms with a local indigenous people that you
unfortunately can't find any further notes or details on. According to the
footnote, Avery would occasionally trade with them and bring back
curiosities unique to their culture to share with the townsfolk.