Naruto GSL is based 500 and some years after the events of Naruto.
For many years the village of Konohagakure no Sato was prosperous. About 450 years after the events in "Naruto" and "Naruto Shippuden" The Uchiha clan and Hyuga clan merged. The shinobi that followed were top of class, Cream of the Crop. The "New" Uchiha clan began to think that Konoha had nothing else to offer them. So the entire "New" Uchiha clan defected from Konoha and created a new village deep in the Desert, called Onigakure no Sato. Oni means Demon, the reason the Uchiha named it this was because the exact location of the village was ripe with a "New" Kind of Chakra that felt almost demonic. The Uchiha later discovered that souls of the lost traveled to a location near the village to be judged to Heaven or Hell.( The environment and description will come later)
After the Uchiha clan merged with the Hyuga clan, they discovered they had formed an entirely new kekkei genkai which they dubbed the "Sharakugan" for it seemed to be a combination of the "Sharingan" and the "Byakugan"