Nightmare Focus Staff is a drop in ST. <swamp> on crusader strike got it from eranikus. https://imgur.com/a/uiNu8kpWho are these players that expected it at exalted?
When we first datamined the item, it was given a special new model we hadn't seen in Classic - so between that and the "Nightmare" name, we thought it would be likely from the Nightmare Incursions. Sometime in the last week, Blizzard changed the weapon to use a much older model that's in line with other raid rewards. We've updated the article and will be updating rep/loot tables soon :)
"It vibrates in response to The Dream... It seems to crave corruption?"Feels like its use is somewhere in the incursions. I wouldn't be surprised if it corrupts the whole incursion zone and all the mobs become corrupted and people start to get extra stuff from the mobs they kill there aka the whole event there changes. It would be interesting to see if it does something big like that or just some cosmetic effect.
Shame that they did not make this event as they stated it will since event is now clown fiesta and bugged as well.