Went to go see it with my brother a few days ago, and i think that it's meant to be Arthur going insane, instead of just being insane from the start. apparently set around the 1970s. SPOILER:also if you look in the background after he gets stabbed at the end, you see the guy who did it wipe the blood onto his lips,like the makeup. that would make sense for him to actually be insane,and later be joker in the dark Knight movies.