In the same way the Demogorgon stalked Will's home in the first episode of Season 1, the square-windowed Byers home door once again opens to reveal some terror in the vein of Steven Spielberg's Close Encounters of the Third Kind (released in 1977, meaning the in-universe characters are likely confused why their lives seem to imitate fiction so often). In Close Encounters, visiting aliens telepathically transmitted visions to a handful of Earthlings, showing them the mountain where contact would be made. It's possible that whoever drew the giant beast in the red clouds (presumably Will) has been seeing visions of this terror, similar to Spielberg's movie.
However, given the Ghostbusters costumes and the movie's release date (and the Montauk Project's history of mental manifestations), it's also possible that Will imagining a multi-legged creature in his head manifested the monster in real life. In 1984, Will Byers would have seen Ray Stantz accidentally choose the form of Gozer's destructor by thinking of a marshmallow man. Considering that Eleven and the Demogorgon were entities with connected abilities but opposite goals, my money is on manifestation of inner evil.