It worked for both younger and older "teens being killed buy a madman" horror fans. The younger ones hadn't seen anything like this - the last scary horror film of this kind was A Nightmare On Elm Street in 1984 - so a true urban slasher horror movie scared them. The older generation recognised it as an affectionate tongue-in-cheek tribute to Elm Street, to Halloween, to Friday 13th etc etc etc.
I didn't find it the least bit scary, but it found it hugely entertaining and very funny. However, the two secretaries at my place of work, who were both in their late teens, thought it was the scariest movie they had ever seen, and couldn't undertstand why I found it to be a comedy. At the time I didn't understand that - but of course, I didn't realise that they'd never actually seen a horror film like that, they weren't even born - or at least weren't watching horror films - from the late seventies through to the mid-eighties.
Of course, once the tribute horror film was released (Scream) the spoofs and copies came out thick and fast - I Know What You Did Last Summer, Jeepers Creepers, Scary Movie, Urban LegenRAB, The Craft - plus all the respective sequels, but none could touch Scream. It came out at just the right time. No, it wasn't scary - at least not to anybody older than 25 - but it was a good movie.