Once a ninja village, Yugakure decided that it didn't want to stay a hidden village and transitioned out into a peaceful and prosperous village instead, calling itself the village that has forgotten wars (戦を忘れた里, Ikusa o Wasureta Sato). However, Hidan, growing up, already showed a tendency towards violent Jashinist ways, disagreed with this and slaughtered his neighbours before leaving the village.
In the anime, when Kabuto Yakushi and Yūkimaru are on a journey, they stop here to rest. Yūkimaru meets Naruto Uzumaki in a hot spring and talks with him about how hearts can communicate. There wasn't much seen from the village in the episode, but it seemed small and had no protective walls, like other ninja villages had. It is possible it was merely a simple hot spring village unassociated with Yugakure.
Trivia