Waknuk was founded by David's grandfather, who was driven by "the ungodly ways of the East" to make a better society. He developed the first district in Waknuk, and relied heavily on the Bible and "Nicholson's Repentances" to form his new society. He was a farmer, and settled down. Others followed, and a small farming settlement gathered around him there.
The place may have been called Waknuk then; anyway, Waknuk it had become; an orderly, law-abiding, God-respecting community of some hundred scattered holdings, large and small. (Ch. 2)
Waknuk relies on ensuring order through a strict religious doctrine. This is enforced through inspectors, who know what the True Image looks like and provide certificates to certify it. Everything needs to conform to the True Image, from livestock and crops to infant humans. When a baby is born, it has to be inspected and given a Normalcy Certificate.
Waknuk is divided into districts. All of them follow this same principle. The area outside the districts is known as the Fringes. If someone does not fit the True Image, they end up there. It is a horrible place.
‘… Man alive, you'd not want to go to the Fringes. Why, they've got nothing there — not even enough food. Most of them are half starving, that's why they make the raids. No, you'd spend all the time there just trying to keep alive, and lucky if you did.' (Ch. 6)
Beyond the Fringes is the Badlands, which no one knows anything about, according to David. He says that anyone who goes into the Badlands ends up dying there. The Deviants who live in the Fringes sometimes cause trouble. They are society’s outcasts are and somewhat bitter about it, especially since they are sterilized before being kicked out. They are led by David’s uncle, “Spider,” whose arms are supposedly too long.