To "squashed butterflies," is to suppress or sacrifice one's dreams and aspirations in order to conform to societal expectations.
Butterflies referring to the euphemism of "having butterflies in your stomach", as a form of nervous excitment. To supress the things that give an iduvidual that sensation is to 'squash' them, and push away the thing that brings them joy - whether that be a person, career or particular pursuit.
"It's too unrealistic, so all I had was squashed butterfliess."