The terrible Red Death plague was spreading rapidly and killing many. In fear of this, Prince Prosepero lived with his nobles in castellated abbeys. This isolated them for the sick, outside world.
The Prince was so confident in their safety that he was willing to throw an extravagant masquerade ball. Thosands showed up as if nothing bad would ever happen to them.
This represents the characteristic that says humans aren't naturally good. These people were celebrating as if people weren't dying just beyond the doors.
There were seven different colored rooms in the prince's place. All had corresponding colored windows except the last room, which had black walls and blood red windows. That room also had a clock that rang every hour. Because of the sullen color scheme and creepy clock, everyone avoided the seventh room.
At the stroke of midnight, while the creepy clock rang, everyone noticed a mysterious figure. Rumor instantly spread and the people were horrified of the figure's appearance. The Prince was angry that anyone dared to "insult" them with such disrespect.
This represents the characteristic that explores the human ability to be evil. The Prince only had bad intentions of catching the masked figure and executing it.
The Prince chased the mysterious figure around with a dagger and some bad intentions. As the prince caught up at the entrance of the seventh room, he cried out and dropped dead.
The Prince's death sparked courage in the other people, so they charged at the figure and ripped off it's mask to find no one under it, and as they ran into the seventh room, they dropped dead too. The Red Death had won.
This represents the characteristic of having elements that are supernatural or fantasy. It wouldn't make sense for a mask to have no one under it, and for all those people to die by walking into the room with the figure.