The Blair Witch Project had a difficult starting point, given that it was made on a measly budget and could very easily have just been lost in the shuffle of far glossier, far less effective horrors. But what it did have was a very compelling story that proved to be beautifully marketable - all they had to do was convince potential fans that it was all real.
Obviously, there would inevitably be a certain degree of cynicism, because there was no way it was legitimately found footage, but the film-makers did seek an authentic feeling to help prop up the magic. The actors, famously, were given only an outline of the plot, and everything was improvised, leading to some harrowingly real emotional responses.
Two of the most effective examples are beautifully simple expressions of that agenda. In the scene in which the tent shakes in the middle of the night, the fear we see is very real as the director shook the tent without fore-warning. And when we watch the cast walk through the woods and find themselves walking in a loop, their breakdowns were the real reaction to having been given deliberately confusing directions designed to get them lost.