In this chapter, everything on the farm appears to be going well. All of the animals put in their effort toward the benefit of the farm, and in return they have more leisure time than they had before, and everyone has plenty to eat. It is similar to the theory of communism; everyone works equally and earns equally.
It becomes apparent in the details, however, that all is not equal on the farm. The pigs walk around behind the other animals encouraging them to work, but spend their own time studying or encouraging rather than actually working. Napoleon works at training the puppies, without explaining why. The pigs get the milk because they supposedly have more work and thinking to do than the other animals. To defend this, they explain that if they didn't have sufficient nutrition, they wouldn't be able to lead and then the farmer might return.
At this point in the book, the animals are mostly blissfully unaware of the tyranny to come. They live happily and cluelessly, working hard and earning their rewards.