Hello,
The "context" allows the GM to introduce varying scales of stressful or horrifying situations.
Here is an example featuring the phobia "Hemophobia":
- Your character is deeply injured and loses a lot of blood (1 Sanity Point).
- Your character is forced to be part of an ancient blood ritual (3 Sanity Points).
Regarding the number of Sanity Points, it may be necessary to playtest the rules in order to fine-tune the values. Perhaps Sanity Points should scale with the character's level. I hope these explanations help you.