The setting of the novel is referred to simply as "the community." There is an implication that other communities exist "Elsewhere," which we find out when Jonas learns about how some people apply for release and are sent Elsewhere. He assumes, early in the novel, that people who are released simply go to live in another community where they might find a better match for their lifestyle or personality preferences.
The community is extremely well-organized. An example of this can be the way that families are put together by a governing body, and everyone is matched for specific traits of compatibility. Another example is the process by which children are educated, and how they are given specific privileges at specific ages. Finally, the process of assigning jobs is also very orderly, where each person's job is selected based on his or her own talents and abilities.
The community has obviously been planned meticulously. The people have been genetically engineered for sameness, so that most of them even have the same eye color. Somehow, they have been altered so that they cannot see color, and therefore color cannot be used to distinguish between things or create differences. The rules are so logical that hardly anyone thinks to question them, thus ensuring a peaceful existence. The pills they take for "Stirrings" ensure that passion will never exist, and therefore neither will the conflicts that normally follow passion.
The community is a society where the founders evidently thought that they could eliminate war, conflict, hunger, and other world problems by planning everything down to the letter. They also thought, apparently, that if they could isolate their own community then they would never be in danger of change, because their citizens would never get ideas from outside places to cause them to want to change. Certainly, it is easy to see the appeal of such an orderly lifestyle, until you start to understand the darkness that must accompany it (such as the releases and the lack of feelings).