In this passage, the protagonist and narrator, Holden Caulfield, is saying goodbye to his history teacher, Spencer. Holden has just been kicked out of the posh boarding school he had been attending.
He tells Spencer that in his meeting with the school head, Dr. Thurmer, he was told that life is a game that needs to be played by the rules. Spencer agrees: "Life is a game, boy. Life is a game that one plays by the rules" (8). This is important, because Holden is struggling to live his life by the rules of other people, and it speaks to his struggle to and inability to fit in. Much of the book is about the conformity expected of everyone in a society: a conformity Holden rejects with his constant complaint of "phony." His nonconformity comes with a price, as he has frequent clashes with those around him, has switched schools four times, and, eventually, ends up in an institution, burned out and jaded at seventeen.
Equally important is his reaction to Spencer, which he doesn't say out loud:
Game, my ass. Some game. If you get on the side where all the hot-shots are, then it's a game... But what if you get on the other side, where there aren't any hot-shots, then what's a game about it. Nothing. No game. (8)
Like many adolescents, Holden craves authenticity, but he keeps finding adults who give him useless advice, phonies everywhere, and disappointing experiences. This makes him simultaneously angry at just about everything around him (his sister, Phoebe, is a notable exception) and hurt because no one seems to understand him.