Bane's nightmare skill can work on both allies and enemies, and is transferred when the sleeping target is attacked, but what are the conditions for doing so? Does the attack have to be a targeted attack, or can any aoe effect cause the transfer (such as ancient apparition's ult)? Also, is it possible to deny allies with this spell, will they take damage while sleeping?
Yes, Bane Nightmare's skill can be used to deny allies.
Nightmare can damage allies (and Bane), and can thus be used to deny hero kills.
Regarding the damage required to wake up the target can be any type: AoE, target skill or auto-attack, even Radiance can do it. This is the reason why playing Bane within low pub teams can be difficult sometimes.
Transferring the Nightmare effect to the attacker only works with auto-attack instead.
One last question, what about dot effects and wards, if I put nightmare on an ally already suffering from, lets say hellfire blast or being attacked by plague wards, will it cause the caster (skeleton king/venomancer) to suffer a nightmare?– l IMar 2, 2012 at 22:08
There was an error in my sentence, I fixed it now. It should answer also to your last comment.– DrakeMar 2, 2012 at 22:44
I see, so only normal attacks cause transfer, that makes the skill much more awesome.– l IMar 3, 2012 at 0:12
@yx Yes, probably one of the best non-ulti skill of Dota 2.– DrakeMar 3, 2012 at 0:26
Just to add to what was already said - DoT effects/AoE/targeted skills don't cause a transfer, but they do wake the nightmared target up.– KotsuMar 3, 2012 at 4:56
to add some information: manual orb effects like huskars/drows arrows and viper/obsidians attacks wake up the target but if they cast it manually (clicking the spell and then target the sleeping enemy) the attacker wont get nightmare.