When the story starts, Bruno and his family live in Berlin during World War II. They live in a huge house and have servants. After a visit from Hitler, the family moves to a new city the boy hears as "Out-With" (really Aushwitz, the notorious concentration camp) because Bruno's dad has been promoted and will be running the place.
When Bruno gets there he is disappointed because the house is smaller, with only 3 floors instead of the 5 he had in Berlin. People are always coming and going through the house. The home is near a wooded area that Bruno is forbidden to explore (though of course he does anyway.)
That's the general setting of the story...the bleak landscape outside the concentration camp of Aushwitz.