There's a whole boatload of things to be afraid of in The Borrowers. Giant eyeballs, rat poison, cats, mean people, and, of course, the unknown. But the biggest thing to fear in this novel seems to be fear itself, because fear is what keeps our characters trapped in their own small worlds. The bravest characters are the ones who are able to think outside the box, and dare to dream of something different.
Having a healthy sense of fear is a good thing in The Borrowers because it prevents characters from making reckless choices and taking dangerous risks.
Fear is a bad news in The Borrowers because it clouds characters' minds and limits their freedom.