Dolls are perceived as harmless, and they can be gorgeous and/or adorable, but there’s still something scary about dolls. It’s probably because many of them fit squarely in Uncanny Valley territory. The blank gaze and unmoving stare reminds us too much viscerally of corpses, perhaps. This goes even more when the doll is damaged in some way, such as missing limbs or eyes, or having holes in its head.
In horror, dolls are often used as part of the scenery to help establish the mood, even providing a theme for The Doll Episode. They may even be the antagonist or be used by the antagonist. Despite how ridiculous a doll trying to kill people should be, it’s still seen as quite frightening. A similar idea lies behind the Demonic Dummy and Scary Scarecrows.