I'd argue most of that is more tragedy than horror - mostly tragedies that the game is ultimately about averting, at that. But even if you take that view, the Giants' role in things isn't as creepy monsters you're supposed to be scared of, it's as saviors. They're the ones who can stop the moon's fall once you release them from whatever Skull Kid did to the Temples, the source of hope for things to have a better outcome. So I'd say it's still a bizarre choice for design for them regardless.