What an odd movie. As far as I can tell based on the subtitles...it's a mystery story set in a wuxia world after an apocalyptic event. Several martial artists go to a fort to investigate stories of deadly butterflies, only to be turned against each other by the intervention of three dangerous martial artists. A scholar and a cool woman wearing green try and puzzle out the mystery, but even if they uncover the truth, will there be a happy ending? Nope.
There's a lot going on in this film. People torn apart by butterflies to terrifying music. Martial artists who set people on fire for fun. A man wearing black fetish armor who tears people's faces off with a metal net. I'm aware that there are many "mystery stories" in the wuxia genre, but this one seems unusual in how it so enthusiastically embraces its horror elements, while thumbing its nose at audience expectations. Definitely curious to see more films directed by Tsui Hark now!
(also, after reading a comment in a review, i'm shocked that The Butterfly Murders was released just a year after John Carpenter's Halloween! There's a similarly anarchic spirit running through both of these films, I think)