Bugsnax and Snaktooth Island have both existed for an indeterminable amount of time, as evidenced by ancient architecture and artwork depicting both ancient Grumpus inhabitants as well as familiar Bugsnax encounter-able within the game's numerous biomes.
Following a filmed message received by The Journalist (an investigative journalist specializing in [or is at least known for] investigating cryptids and monster rumors for their employer GNN) from Elizabert Megafig, which requests they come to Snaktooth Island to write a story about the Bugsnax Elizabert had discovered inhabiting it, The Player ventures via airship to the all important island with the reluctant allowance of their boss, C. Clumby Clumbernut.
Upon The Player's arrival to Snaktooth Island, a rogue Mothza Supreme swoops in to unexpectedly tackle The Player's airship, sending them off the ship's side to land into the edges of Flavor Falls, while the abandoned and crumbling ship careens into Snaxburg's outskirts. The Player attempts to explore, only to fall through an already broken, crumbling bridge, and concuss themselves upon a rock embedded below.
Upon awakening, The Player discovers a dramatically starving and delusional Filbo, who mistakes them for Elizabert at first, before recognizing The Player as a new face and likely the journalist Liz had him help film the initial invitation tape for. After helping catch Filbo some Bugsnax with the help of his borrowed Snaktrap, and the shocking revelation that Bugsnax transform the eater into whatever Bugsnax they've consumed, the two set off for Snaxburg.
After a quick trek through Garden Grove and encountering Beffica and Wambus, Filbo bids The Player to help them find the scattered Grumpuses who once inhabited Snaxburg and convince them to return, for whom he will proceed to throw several mostly unsuccessful parties.
The Player should proceed to do so, potentially committing to several sidequests along the way, however ultimately all Grumpuses will return to town (besides Eggabell, who decides to remain on the Frosted Peak until she can find the then missing Elizabert). Overjoyed, Filbo will throw a grand party to welcome back all the once scattered inhabitants.
Though much more successful in gaining the enthusiasm of the partygoers than his few previous attempts before all Grumpuses had returned, the party is inevitably cut short by a dramatic earthquake that brings most if not all buildings in Snaxburg crashing down upon themselves, rendered unusable.
Filbo and Eggabell, the latter of whom had come down the mountain in the midst of the recent chaos, bring order back to the panicking townsfolk, and set out to the mountain with the hope of finding the missing Elizabert behind a mysterious door Eggabell had thus far been unable to open.
With Filbo and The Player's help, Eggabell manages to open the Mysterious Door on the Frosted Peak, and the trio venture forth, only to find the ground collapses beneath them, sending them tumbling into The Undersnax. It is here that The Player and Filbo, after a short reunion, discover Elizabert, who has at this point been dramatically transformed by a swarm of forcefed Bugsnax, now resembling a combination of all Boss Bugsnax, as well as many lesser Bugsnax making up her remaining upper torso.
Elizabert tells the horrifying truth of Bugsnax to The Player and Filbo in the form of an Interview that The Player inevitably insists upon: that Bugsnax are an insidious parasite species that prey upon the insecurities of unsuspecting Grumpuses, inevitably transforming them into more Bugsnax before their consciousness fades and they disassemble into individual Bugsnax, the fate of any and all previous Grumpus inhabitants of Snaktooth Island, which is itself simply a gargantuan pile of endless Bugsnax. Somehow, despite countless Bugsnax force-feeding themselves to a helpless Elizabert, who had fallen into The Undersnax after an earthquake separated her and Eggabell and led to a fissure opening beneath the former, Elizabert defiantly held onto her sense of self and forced the Bugsnax to turn into Her, rather than the other way around.
After this is explained, Eggabell tumbles onto the scene, and refusing to escape without her, simply pushes herself inside the transformed Elizabert and merges with her. The now Bugsnakkified duo bid Filbo and The Player to gather the inhabitants of Snaxburg and escape Snaktooth Island before the whole island collapses under a torrent of rabid Bugsnax, who'd been driven into a frenzy at the prospect of turning the inhabitants into yet more Bugsnax, which Elizabert had just barely been holding back up until that point through sheer power of will, manifesting up until that point as the frequent earthquakes Snaxburg's inhabitants had been experiencing.
Eggabell tosses The Player up through the mouth of the volcano, followed shortly by Filbo, presumably tossed by Elizabert, and the two share a similar meeting to their first within Flavor Falls, only now the environment was filled with piles of inert Bugsnax brought to the surface by the island's current chaotic brink of disaster.
The two find that Snorpy Fizzlebean back in Snaxburg has both repaired The Player's airship, and supplied the townsfolk with various weapons to combat the oncoming tide of Bugsnax. Leaving Filbo to fuel the airship, The Player proceeds to work their way through town, rescuing the inhabitants, and bringing them back to the airship so that they can all escape.
At this point, it is possible for The Player to allow the inhabitants of Snaxburg to perish via Bugsnax assimilation, should they fail the proceeding combat minigames utilizing the tools gathered over the course of their adventure, leading to a benign Bad Ending which simply lacks those perished Grumpuses.
Ultimately, Filbo, The Player, and any Grumpuses they've successfully saved will start to shove off from the collapsing island, only for a Mama Mewon and a Mothza Supreme to assault the airship, nearly leading to a deadly repeat of The Player's initial arrival. However, the combined Elizabert and Eggabell jump from The Undersnax and save the escapees at the last second, just in time to wave them all goodbye as they leave Snaktooth Island behind for good.
The airship, although escaping successfully, crash lands on a distant beach, and those who've escaped have one final chat together as they reminisce on what they'd learned while on Snaktooth Island while a nearby city looms on the horizon. Finally, The Player returns to their boss C. Clumby Clumbernut, and with Filbo as witness, offers a faulty account of their experiences on Snaktooth Island which claims that Bugsnax were a hoax, in the hopes that no-one would ever go to Snaktooth Island again. While impressed with the story, Clumby immediately fires The Player, as they'd long since committed to the idea that The Player would have simply died on Snaktooth Island, and The Player at that point was indeed considered legally deceased, which they would need to rectify. A hopeful Filbo then asks The Player if they would help him run for Mayor, which The Player inevitably accepts.
The credits roll, featuring photos of the hopeful futures of all survivors of Snaktooth Island. Following the credits, if The Player was successful in rescuing all Snaxburg inhabitants, a short secret dialog between C. Clumby Clumbernut and an unknown, deeply voiced party ponder if The Player and Filbo were truly ignorant as to the presence of Bugsnax, or if they were simply lying to keep the truth hidden, ultimately concluding that they should keep an eye on them, followed by the following dialogue in Latin:
Mysterious Voice: "Tu Quid Edas" (You are what you eat)
Clumby: "Omne Vivum Ex Bugsnax" (All life comes from Bugsnax)
It is thus far presumed by the community that this indicates Clumby's association with the Grumpinati, a mysterious sinister organization believed in solely in-game by the highly intelligent Grumpus Snorpy, and parallel to the real world fictional organization the Illuminati.