I can't be sure about Masters of Horror, but far as I can find about this series,it is just that, a series. The "episodes" were not released as films seperately. Thus making no sense to put them all in the film database.

Well, I'm not sure about what to do, but there are many miniseries treated as films and I can log those in Letterboxd as well (for instance, Assayas' Carlos, Chodolenko's Olive Kitterridge and a long etc). Some of these "episodes" have been screened at festivals as if these were films and certainly are independent pieces of work. There aren't plot connections between them. I guess it has this treatment because every one of these was made by a prestigious director. Every episode is more or less treated like a new film by them.

Btw, I'm thinking for a long time that would be cool something similar to Letterboxd, but just for TV-series. People like to log what they see and it would solve what we are talking now.

I'm not sure about what to do, but there are many miniseries treated as films

This one is easily explained, miniseries are always allowed in the movie section as a single entry!

I just want to know why I can log Masters of Horror episodes in Letterboxd, but Fear Itself don't. If those count as separate films, why these not?

This one is more complicated. We do allow some anthology episodes to be added as movies, but I don't think there is a clear-cut rule. As far as I know this is mostly for film-like episodes (Masters of Horror is a good exemple).

Some of these "episodes" have been screened at festivals as if these were films and certainly are independent pieces of work.

If this is true, I think they would qualify...

As far as I know, Carpenter's Cigarette Burns was screened at Sitges back in 2006 (and won a prize!). No idea about the rest...

http://sitgesfilmfestival.com/cas/arxiu/2006/noticies/?id=1002748