I'll say one thing for Lynch, he's severely restricting, or limiting himself, to a niche genre. He's a master of unnerving the viewer with a combination of odd close up camera angles, shutter speed, colour saturation and sound. The way he pulls it all together creeps me out in ways that a horror film that has jump scares, a monster with all the special effects and gore and all that shite ever could. It's almost Friedkin/Kubrick esque, with a dash of his own weirdness. I'd love to see what he could do with a solid genre psychological horror, which Twin Peaks can be in small doses. The scene at the beginning of the 3rd episode was a little bit too drawn out, and the stutter effect a bit overused, but the atmosphere of the scene was really unsettling.
You seen
Blue Velvet, Mac? It's not quite a traditional psychological thriller, there are a number of trademark Lynchian deliberately incongruous elements, but it's more in line with a typically restrained story of that ilk, certainly when compared with his other (brilliant in their own right, but downright perplexing to the uninitiated) psychlogical horrors like
Lost Highway,
Mulholland Drive, and definitely the highly-indulgent
Inland Empire (which I still dig for what it represents - particularly the off-kilter experience of watching it, passages of boredom included - but totally get why others, even longtime Lynch fans, don't at all).
Eraserhead is another, but is more explicitly a dark fantasy, a perturbing dreamworld rather than the deranged splinters of a subjective reality.
I'd argue it's right up there with
The Elephant Man and
The Straight Story as his most restrained narrative experience, with the reins just slackened enough for him to impart his weird magic to compelling effect.
Dune was a more 'controlled' film in other ways too, but with
Blue Velvet it feels very much like a stylistic choice just like it was with those other two more "normally" told tales of his. That simmering contrast, the underlying tension held within its very form is really unsettling in more obscure ways than his direct (trademark) use of sound and stuff, and it ventures to pretty fucking deep dark places of the psyche few films before it had ever dared tread. It's proper exceptionally well-crafted, grounded-yet-heightened nightmarish storytelling, and shows what mastery Lynch is capable of with the screws tightened a bit.
I love
Fire Walk With Me when considered in an
almost-standalone unflinching psychological horror context too, but that's more disjointed and goes full-weirdo in places, so doesn't really fit your criteria. It contains moments of absolute, bone-chilling horror though, not achieved through jumpy shite but instead real inspired empathy for what the central character is dealing with - the deeper you understand her, the deeper the horror gets inside you. There are scenes and
images in it that can be held up as some of the finest examples of the under-the-skin Art of horror - horror as a visceral-but-also-cerebral inner sensation, a raw engagement with the subjective world of the character. I'd reel off a few memorable ones here, but I'd much prefer that people felt them for themselves directly, rather than looking out for them after someone on a forum had talked them up (which is always counterproductive).
I'm quite biased with Lynch, because I can honestly dig his
trips from both ends of the spectrum - I love his very restrained stuff, and I love some of his wildly self-indulgent stuff, for very different reasons but also totally feeling the common stylistic threads. Everything Lynch does is unmistakably Lynch in one sense or another, he's like a musician who you can identify from just a split-second fraction of one of their licks. That's a very welcome thing in my eyes (and ears), so I more often than not forgive him his
'oookaaaaaay' wig-outs. I agree in principle though, it would be very interesting to see him return to growing within a more stable container.
