I always get this one mixed up because the original story really wasn't one single definitive thing. It started as an image macro, that infamous, creepy picture with the text 'Go to Sleep'. The plot kind of assembled itself through creepypasta wiki entries and forum posts. The core version, from what I've pieced together, involves a kid named Jeff who gets attacked by bullies with bleach, which disfigures him and drives him insane. He's hospitalized, but the pain and trauma warp him, and he eventually kills his family before escaping to become this grinning, knife-wielding murderer who terrorizes people, whispering that line about sleep. It’s a very barebones slasher origin.
What’s interesting is how the 'plot' kept evolving with each retelling. Some versions add his brother, Liu, as a protagonist trying to stop him. Others make the bullies' attack more graphically brutal. The earliest versions on the Creepypasta Wiki are pretty short and simple, more focused on the chilling image than a complex narrative. Trying to nail down a 'full' plot is tricky because it’s more of a communal campfire story that got passed around and changed by every person who told it. The power was always in that simple, unsettling concept, not in a meticulously plotted novel.