In the movie, the Brothers Grimm (played by Matt Damon and Heath Ledger) stumble upon a real life fairy tale curse.
Throughout the movie you catch recognizable glimpses of the classic fairy tale of Little Red Riding Hood, but with an eerie supernatural twist. And so the big bad wolf becomes the evil queen's werewolf minion and the only thing that can stop him is a magic woodsman's axe.
I particularly like Heath Ledger in fantastical roles like this one and the role he played in A Knight's Tale. As the joker?? Eh... not so much. But he's definitely awesome in this movie.
The end of the movie is a bit of a teaser as it's left up to the viewer to decide whether or not the evil queen is really gone or just temporarily set back from her goals towards perfect beauty and youth and immortality.