Act I, Scene 4 is set on a street in Verona, Italy. It is set on the same day that the rest of the play so far has been set. It is evening now, and Romeo, Mercutio, Benvolio and some others are out on the streets.
In this scene, Romeo and his friends are on their way to the Capulets' ball. They are going to go and crash the party. This is where Romeo and Juliet will meet one another and fall in love. This will lead to the events that make this play so tragic.
Act I, scene iv occurs in the early evening on the streets of Verona and contains one of the most famous speeches in all of dramatic literature: Mercutio's Queen Mab speech.
As Romeo attempts to explain his apprehensions in attending the Capulet's party, Mercutio attempts to dismiss his dream and launches into the Queen Mab speech as a way of explaining where our dreams come from and the futility of trying to put much stock in them.
It is after the Queen Mab speech, however, that Romeo does share his premonition that their attendance at the Capulet's party will set into motion a chain of events that will lead ultimately to his own death. The audience is aware of the accuracy of this foreshadowing from the information we received in the Prologue. However, Romeo--in true Romeo form--ignores his own fears and better judgement and heads to the party anyway.
The stage direction at the very beginning of this scene clearly states: A STREET. So this scene is taking place in a street in Verona.
In this scene Romeo, Benvolio, and their friend Mercutio, all wearing masks, join a group of mask-wearing guests on their way to the Capulets’ feast. Romeo is sad and disheartened and expresses doubts about attending the ball because they are Montagues the sworn rivals of the house of the Capulets. However, their doubts are soon brushed aside and they determine to attend the ball. The scene ends with Romeo expressing his anxiety that his attending this ball will be the beginning of a chain of events that will result in his untimely death.