Am so very relieved for you all, Jo. I know only too well how it is when cats go missing, having lost two without trace, and one to an RTA.
Our ginger boy disappeared for more than a day, the other day, and like you we were devastated. Thankfully, he too showed up the following night.
I suspect in this instance, your little lad took fright and went to ground somewhere until he felt it was safe to come out. The good thing is, he didnt go far, and he had the sense to come home and to show his face when a familiar family memebr was out looking for him. I think you can take huge comfort from that, as it sounds like your little lad has some strong common sense.
I thoroughly empathise with your dilemma - our last but one cat lived until he was 20, and we only knew one instance where he stayed away from home overnight in all that time. Then we had Mac, and we lost him to an RTA at just coming up to a year old. If you choose to let your cats out (and I say that as one who does, even though I'd really rather keep them as indoors, or with a properly cat proofed garden) then it's a risk you have to accept, although to be honest, I think as you say, yours just got a fright, and didnt feel confident enough to show himself once the initial fuss died down. The fact he didn't go far, and was able to make his way back to safety is a very big plus point.
My OH reacted just as yours did. So sending a hug for him too, as no doubt his nerves were in shreds.