"I'm scared, mommy!" he said between sobs.
"What are you scared of?"
"I'm scared of the spy camera!"
Ah yes, the terror of the spy camera phase. I remember Alice went through a similar phase around this age, and it really makes sense. It is scary to have a glowing red eye staring at you while you sleep.
I rocked Simon, and read him books, and talked to him about what a nice spy camera he had, but what really seemed to help was turning off the infrared, which enables us to see the kids in the dark, but also causes the glowing red lights.
The next day, I began the exposure therapy. We would look at the spy camera closely, and talk about what a nice spy camera it was and pet it. We'd go visit the spy camera in Alice's room, and look at it, and touch it, and talk about how nice it was.
It seemed to eventually work and Simon stopped waking up at night scared of the spy camera. He may still be slightly scared of it at night, but he tolerates it.
The other effect is that he now thinks it is a fun game to "Go see Simon's nice spy camera" then to "Go see Alice's nice spy camera." He'll make us go back and forth a dozen times, enjoying facing his nighttime fear in the comfort of daylight.