Alan Wake's American Nightmare is a standalone DLC with a short story and an arcade mode. It's a spin off that is canon, but is not necessary to understand the story as it didn't have much impact on the overall series plot. AN is written as a Night Springs episode, a pulp series being a parody of Twilight Zone. This allows for more crazy enemy types and weapons without being out of place.
It features a ton of quality of life improvements: much longer sprint, stamina regens almost instantly, flashlight battery regens much faster, better UI. Action is more snappy and arcade'y.

It's a cool, fun addition to the franchise. Dirt cheap during sales as well.

It definitely wasn't worth however much I paid for it. It's worth the $1 or so it is now, I guess. The repetition was unexpected and completely unwelcome. I was enjoying the first time I ran through the three levels. But after the third time, I was checking the clock. The base game had better writing. Honestly, this whole meta narrative stuff isn't for me. That's why I'm not going to bother with Alan Wake 2.
EDIT: I changed my mind. I'll take a look at Alan Wake 2 when it's on a deep sale.

This is definantly a case of "its so bad its good"
Would you have the same experience as me if you just watch the cutscenes of Mr.Scratch Youtube? Yeah probably.
Play it if you liked the combat of the First game, cuz its 50% mid gameplay and 50% of standing still watching a crt tv, or listening to a radio, or listening to a piece of paper.
Also all the women in this game are sexualised in a way that feels really awkward, like porn level writting and acting.
It honestly felt like a community made DLC more than anything.