“What causes night terrors in children?”

Night terrors are a normal developmental variant in some children. They are not abnormal and do not have something that could be described as " a cause". It is appropriate to reassure parent and child that these are part of normal development and will pass as the brain matures.

Night terrors should be distinguished from other problems such as posttraumatic stress disorder or substance abuse if those are relevant to the circumstances.

Night terrors occur in deep sleep, not dream sleep. More common in children, the cause is not known, but can worsen during traumatic times or after nights of sleep deprivation.

See this link for some insight into your question:
https://kidshealth.org/en/parents/terrors.html