From the Night Hag statblock, MM p. 178:
Nightmare Haunting (1/Day). While on the Ethereal Plane the hag
magically touches a sleeping humanoid on the Material Plane. … As
long as the contact persists, the target has dreadful visions. …
From the Border Ethereal description, DMG p. 48.
From the Border Ethereal, a traveler can see into whatever plane it
overlaps, but that plane appears muted and indistinct… Ethereal
denizens watch the plane as though peering through distorted and
frosted glass, and can’t see anything beyond 30 feet into the other
plane. … Normally, creatures in the Border Ethereal can’t attack
creatures on the overlapped plane and vice versa. … The exceptions
are certain magical effects (including anything made of magical force)
and living beings.
A plain reading of the night hag’s Nightmare Haunting (NH) action suggests that any night hag can use her Etherealness action to enter the Ethereal Plane and inflict NH on any sleeping humanoid on the Material Plane. The NH description doesn’t state that the night hag must be within a specific distance of the humanoid she’s targeting. However, I’ve seen discussions online where players argue that the night hag must be within touching distance of the target (and so PCs can defend against NH by riding on a vehicle that travels faster than the night hag can move, preventing her from maintaining contact).
It seems to me that since the night hag is “magically” touching the NH target, she can overcome any usual proximity requirement to interactions between creatures in the Border Ethereal and objects on the Material Plane, just as she is able to overcome the usual rule against attacking creatures on an overlapped plane. The magical nature of NH also allows her to inflict it whether she can see the target or not. Is this correct?