muscly/muscley is commonly used in informal or casual UK English.
If some person is brawny or has bulging well-developed muscles, you can either call them 'muscly' or 'muscular'. In this instance, the 2 words are synonyms.
But 'muscly' is only used this way - its usage is far more narrow than 'muscular'.
'muscular' has a broader meaning and can be used in several ways:
"He suffers from the disease muscular dystrophy"
"Tigers have much more muscular strength than cats".
In these two examples, I cannot use 'muscly' instead of 'muscular'
So for describing someone with well developed muscles, you can call them 'muscly' or 'muscular'.
In other cases, you need to use 'muscular'.