Note: The movie is rated PG-13.
Like all of the Mortal Kombat games, MKII is about warriors fighting in a tournament for inspecific power and fame. Shang Tsung is chosen for his ability to transform into every other character (except the two non-playable characters).
This movie aims to demonstrate as many quirks and fatalities of the game, as possible. Examples include two Shang Tsungs with a Raiden child, a headless Reptile eating Kitana's head and a bloody clone of Jax. The AI is also humiliated.
The author's comments page is a definitely recommended reading for this movie.