This story is very frequently cited as a creepypasta. It was never intended to be one. It's a fanfic, or a Dark Fic more specifically.
Everyone "knows" this fic started the trend of Pinkie having a violent, stoic alter ego that goes by "Pinkamena Diane Pie", inspired by a disturbing scene in "Party of One" where a flat-haired and schizoid Pinkie has a conversation with various inanimate objects. Not only was the fic released before "Party of One" premiered, but Pinkie is her usual curly-maned and cheerful self despite torturing ponies to death, and this supposed "Pinkamena" alter ego never appears at all. A lot of the unease of the fic comes from the fact that Pinkie, as her normal happy-go-lucky hyperactive self, is either unaware of or apathetic to the horrors she's committing; an evil and murderous alternate personality would defeat the whole point. The blog Ask Pinkamina Diane Pie probably didn't help.
Creepy Cute: Pinkie Pie, of course. But who could forget Apple Bloom?
Epileptic Trees: Pinkie's line "I don't make the rules" has led to lots of speculation that she isn't truly in control of her actions, that somebody or something else is really in charge of what's happening (or at least backing her), and/or that she's not the one who's actually committing the murders:
Government Conspiracy: Pinkie's superior is Princess Celestia. How else could Pinkie, as per the image in the front page, kill Princess Luna, a Goddess of the Night, and then get away with it scot-free?
Demonic Possession: A hellish being has taken over Pinkie's body and is forcing her to make these acts against her will. The fancomic "The Six Winged Serpent", which can be found here, is a noticeable example of this possibility.
Fanon: Fanworks always portray Pinkie as her depressed, straight maned "Pinkamena" instead of the normal Pinkie. Even though the fic was made before, not after, Party Of One.
Harsher in Hindsight: One episode of the actual show involves Pinkie Pie having a psychotic break and being in a room alone with Rainbow Dash. The fic became more disturbing thanks to that coincidence.
Naturally, this one ('Party of One') is relied on for the trailer.
"Green Isn't Your Color" becomes unsettling after reading this fic. The creepy stalkerish thing is bad enough, but she also threatens Twilight Sparkle by taking a bite out of an apple. And shortly afterwards we're treated to a closeup shot of cupcakes.
It Was His Sled: The fact that this story was "Grimdark as Fuck" was intended to be a big twist originally, which explains the innocuous-sounding title. Seeing how this story has been mentioned all over the internet and the fact that it is labeled as "Grimdark as Fuck", it's safe to say that twist has long since been spoiled.
The fanfiction was so notorious within the fandom that it even got its own confirmedKnow Your Memearticle.
The mental imagery caused by the basic premise of the plot itself, the shocked/disgusted/horrified reactions to the fanfiction being spread around by fainthearted readers (or at least those who have heard of it but haven't read it yet due to fear of being scarred and traumatized for life) across the Internet and the various fan arts it gained had made the fanfiction appear much worse than it actually is.
Memetic Psychopath: This fic is single handedly responsible for turning Pinkie Pie into one.
Nightmare Retardant: For those frightened at the idea of Pinkie Pie going insane and murdering her friends, Cheese Sandwich has proven himself to have superior partying/reality-bending powers than Pinkie Pie. Thus, he could overpower her to save her victims. Maybe.
Ron the Death Eater: Take a character who is not only a hero, but a nice character overall, though somewhat bubbly, and make her the extreme opposite, though still technically who she is, just insane, and bam, you've got Pinkie in this fic.
Squick: All of it, but mostly the part where Pinkie Pie squeezes Rainbow Dash's intestines to get rid of the bodily fluids inside them, then flosses her own teeth with said intestines, and to top it off, Rainbow pisses herself twice.
The Woobie: You really can't help but feel horrible for poor Rainbow Dash.