The mood and setting as the story opens is generally cheerful and optimistic, showing a pleasant town getting ready for church on Sunday. We are told that before this fateful Sunday, the Reverend Hooper had been an amiable and well-liked preacher, whose sermons were mild and gentle as he tried to "win his people heavenward by mild, persuasive influences." Essentially, Hooper is described as popular in his community but not really an effective preacher in his job of saving souls; he's someone who does not make waves and preserves appearances.
When Hooper appears in his black veil, this superficial harmony is disrupted, and his preaching and the church itself become a genuine religious experience as opposed to a Sunday social event. The narrator states of Hooper's first sermon while wearing the veil that "A subtle power was breathed into his words" and rather than people listening to his sermons as almost pleasant entertainment, they react by seeing his words as applying to them and their own sinful nature.
The mood shifts to a mix of fear, confusion, and even genuine piety.