The problem was the cast. He used sideshow performers: People without arms or legs (or both). Conjoined twins, a half-man-half-woman, pinheads and more.. Critics and viewers hated it. The movie bombed, and was was widely banned.. Browning's career hit the wall.
Freaks follows a traveling circus. Cleopatra, a glamorous trapeze star, is engaged to Hans, a dwarf. Her secret plan is to murder him so she (and her thug boyfriend) can get his pending inheritance. Things get ugly at the wedding party. She gets drunk, insults her groom, and cackles. The freaks (who throughout the film have been portrayed as kind and friendly), offer to "accept her" as "one of us" and perform a chanting ceremony. Offended, Cleo has a meltdown, screams "Freaks! Dirty, slimy freaks!" at them, and kicks them out.
The seal trainer overhears the murderous plans. Hans and his pals are warned. He plays dumb, secretly spitting out the "medicine" his wife gives him. Other freaks are always nearby, watching...
A storm hits. The freaks confront Cleo. With knives. (Thug Boyfriend is busy trying to assault the seal trainer.) Soon the villains flee in terror into the woods, with the freaks in persuit.
Our villains, we learn, get mutilated.
It's a weird movie. Part freak show, part "Why, they aren't that freakish at all" show, part "evil people get punished" fable. I suspect this and the fact that it was banned helped make it a cult hit.
Also, I think everyone fells out of place or powerless sometimes. Seeing the underdog (in this case, the freaks) outwit jerks assures the audience that they, too, might be able to defeat their tormentors (hopefully not by carving them up, but you get the idea). It assures us, "Underdogs are people too. And we can kick some serious %&!! if provoked."