In the Land of Water, Kirigakure — or the Hidden Mist Village — is one of the five most powerful ninja villages in the world of Naruto. Hailed for their mastery of Water Release ninjutsu and its associated subcategories, including kekkei genkai such as Boil Release, the village has produced some of the strongest shinobi in history, including the likes of Yagura Karatachi, the Fourth Mizukage, Mei Terumi, the Sixth Mizukage, and others such as Ao and Zabuza Momochi. Zabuza in particular, was part of an elite group of shinobi who hailed from Kirigakure, and were famed throughout the world as the Seven Ninja Swordsmen of the Mist — for wielding seven legendary blades that granted users unimaginable power.
Despite this, Kirigakure had a dark and turbulent past, marred by violence, tyranny, and political turmoil. Shortly before the start of the series, it was known as the "Village of the Bloody Mist," owing to the unstable and dangerous nature of the village at the time. It also had an especially high number of missing-nin from among the Five Great Shinobi Countries. This is a hint towards the fact that the internal conflict within the village had led to many shinobi defecting in fear of their safety, being expelled due to their overtly radical ideas and violent nature. However, despite all this, Kirigakure was still hailed among the strongest of the shinobi villages in Naruto, and it eventually managed to emerge from these dark times with a new identity free from the horrors of its dark past.
Village Of The Bloody Mist
Even from the time of its inception, Kirigakure's societal hierarchy adhered to a three-fold structure as per Kakashi Hiden: Lightning in the Icy Sky. This comprised clans that originally belonged to the village at the time of its founding — who sat at the top of the power structure — followed by clans from villages that had allied with Kirigakure over the years. Lastly, at the very bottom of the pecking order were the clans whose villages had been defeated and annexed by Kirigakure. They were often kept at an arm's length from the other clans and forced to take on the most difficult missions in order to quell any threat of rebellion. The village was also invaded by the Kaguya clan who were swiftly defeated, but this led to kekkei genkai users being treated with suspicion, to a degree where members of certain kekkei genkai wielding clans were even killed on sight.
One of the main reasons behind the moniker of "Village of the Bloody Mist," emerged from the graduation exam conducted by the village's ninja academy. Under this system, students who wished to graduate were forced to fight one another to the death, and only those who emerged with their lives were able to move forward. While this did yield exceptionally strong and battle hardened shinobi, subjecting children to such an ordeal earned the ire of other ninja villages who began to look down on Kirigakure's practices. Zabuza Momochi famously slaughtered all the members of a graduating class, despite not being a student, earning a reputation for himself that led to the end of the village's horrific graduation exam.
The Horrors Of Yagura's Reign
At the time of the Third Shinobi World War, it appeared as if the elderly Madara Uchiha had gained some degree of influence or control over the village. This can be surmised from how he arranged for the Three Tails to be sealed into Rin Nohara, who was inadvertently killed by Kakashi in front of Obito Uchiha. In effect, this whole sequence of events was orchestrated by the elderly Uchiha as a means of bringing Obito over to his side to further his Eye of the Moon Plan. The Three Tails was subsequently sealed into Yagura Karatachi, who became its jinchuriki and eventually rose to the rank of the Fourth Mizukage.
Obito took on Madara's identity after his demise, and managed to bring Yagura under his control with genjutsu at some point. As a result, the reign of the Fourth Mizukage was an exceptionally dark time in Kirigakure's history, where corruption and internal scuffles for power reigned supreme. This political turmoil also led to a great number of defections, which was the source of the high number of rogue ninja who let go of their allegiance to the Land of Water. To combat this, the village established a special division of their Anbu known as Hunter-nin or the Corpse Processing Team, whose duty it was to completely erase any trace of the rogue ninja they were pursuing with their high level ninjutsu and medicinal skills.
Following Zabuza's massacre, the graduation ceremony was discontinued during Yagura's regin to prevent further bloodshed among Academy students. Zabuza himself disagreed with the village's ideology at the time and sought to distance himself from it. He even tried to stage a coup d'etat to assassinate Yagura, but was thwarted by one of his subordinates. The Hunter-nin Ao gradually managed to surmise that somebody was controlling the Mizukage, however, no one in the village was able to identify the culprit.
The End Of The Seven Ninja Swordsmen
Defection was a problem that led to the collapse of the Seven Ninja Swordsmen of the Mist, who were among Kirigakure's most powerful shinobi. While the village had possession of all seven swords initially, they all either fell into enemy hands, or were taken away by missing-nin such as Zabuza, who took Kubikiribocho, or Kisame Hoshigaki, who took Samehada. Once passed down over generations to the strongest of Hidden Mist shinobi, these blades were treasured relics of the village's heritage, and their loss was a great blow to its pride.
By the time of the Fourth Shinobi World War, the only sword that remained in Kirigakure's possession was Hiramekarei wielded by Chojuro, who went on to become the Sixth Mizukage after succeeding Mei. The collapse of the Seven Ninja Swordsmen of the Mist was a great loss for the village. It took quite some time after the end of Yagura's tenure, and the ascension of Mei to the role of Fifth Mizukage for the village's reputation and military strength to be rehabilitated.