The Nightmare Sigil is an item collected during the Diablo 4 end-game and used to open up Nightmare Dungeons.
When Nightmare Sigils are found, they add special modifiers to dungeons and provide better loot. Sigils effectively modify the monsters inside the dungeon.
Nightmare-difficulty dungeons in Diablo IV unlock upon locating your first Nightmare Sigil. Each sigil corresponds to a specific dungeon somewhere within Sanctuary. These sigils will add special modifiers to their dungeon, increasing the ferocity of the hell-servants waiting for you inside and providing higher-rarity loot. Through completing Nightmare dungeons, you will recover even more powerful sigils, introducing increasingly death-defying modifications and challenges for you to overcome. As you progress into higher and more challenging World Tiers, new Nightmare Dungeons will become available for you to explore.