Freddy's Stealth Mechanic

So I was looking for information online and wasn't able to really find much. So I was hoping to get some information about Freddy's stealth mechanic. So from what I understand, while the survivors are awake, they cannot see him from a distance but can hear his terror radius, then once he comes within a certain radius he begins phasing in and out of sight. Thing is, is I remember seeing his stain at least when he's invisible. Is this correct, you see a disembodied stain floating around? Is there legitimately anyway a killer could make use of the invisibility and phasing while the survivors are awake, or is it as bad as it sounds?

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