She chooses fear and wanted everyone to bow down to her. But then she killed everyone, so no one is left to fear her or to bow down. Stupidest move ever.
She wants, since the beginning, to be Queen. She wants to rule. For that, you need people and a kingdom to rule. If you destroy everything and kill everyone, then you're not a Queen or King, just a murderer. Huge difference between "killing and being ruthless to become what she wanted" and "killing and destroying what she always wanted because her nephew wasn't in the mood last night". And of course, let's not forget that she completely ignores her enemy, letting Cersei escape (or the possibility to escape at least), because it's obviously more important to kill innocent kids in the street for 30 minutes. The writers butchered her character development and this whole sequence was embarrassing. If they really wanted to make her a Mad Queen, they should have added 2 or 3 episodes to show how she would evolve like this. Oh, and they should also have learned to write a story, or hire an other writer (a competent one) to write that part. They just don't have the skill for anything deeper than dumb butchery.
EDIT: She could even try to kill Jon, it would have been a lot smarter and more logical than what they made her do.
She chose fear by attacking King's Landing, but at no point did I get the impression this was Dany at her most calculating. This was pure unadulterated rage and anger over events since coming to Westeros so "stupidest move ever" actually fits the bill for what was happening and is still completely in keeping with her character arc.
I really don't see how anyone can complain when her character has been developing up to this point for 8 seasons. She's always shown signs of brutality and a general lack of empathy but always has someone to calm her darker impulses and fuel her narcissism.