The play is set in England at the end of King Henry IV's reign. Henry IV, by the way, ruled England from 1399 to 1413. In the play, Shakespeare condenses events from the last few years of Henry's reign into a very brief amount of time (less than a month).
Like Henry IV Part 1, Shakespeare does a lot of maneuvering between the "low" world of the commoners and the "high" world of the nobility in Henry IV Part 2. The three main settings of the play are the court, Eastcheap London, and Gloucestershire.
The world of the court is somber and intense. The palace is where King Henry IV deals with weighty issues like civil rebellion and his tumultuous relationship with his son, Prince Hal. The mood here is especially somber because the king is very ill. In fact, the king spends a lot of his time laid up in bed (not getting any sleep), where he eventually dies. In other words, the court isn't exactly the happiest place on earth.
The world of Eastcheap (a busy market street in a seedy London neighborhood), on the other hand, is where a lot of raucous activity (drinking, brawling, prostitution, gambling, etc.) goes down. (This, by the way, is just the kind of neighborhood were one could catch a Big Willy Shakespeare play in Elizabethan London.) Eastcheap is also where the Boar's Head Tavern is located, which means it's where Falstaff and company get rowdy. (Think Spring Break 1599 with knife fights and clever word play.) Basically, Eastcheap is associated with excess and civil disorder. We also want to point out that, even though Henry IV Part 2 is set in 1413, Eastcheap looks and feels a lot like England's colorful commercial district in the 1590's (that's when Shakespeare wrote the play). Critic Jean E. Howard notes that characters drink imported sweet wine, refer to clothing worn by Elizabethans, and make references to popular Elizabethan plays.
In Henry IV Part 2, Shakespeare also takes us through Gloucestershire, where Falstaff visits Justice Shallow and recruits soldiers for the army. The world of Gloucestershire is interesting insofar as it offers a glimpse into country life, a world that's far different than the hustle and bustle of London and the somber court. Here, Justice Shallow hangs out with his longtime friend, Justice Silence, where the men enjoy the middle class comforts of country living, which, apparently, involves eating lots of apples and discussing the price of livestock. Some literary critics say that Shakespeare sets out to portray the charms and simplicity of country life in the Gloucestershire scenes. In 1928, however, critic G.B. Harrison was one of the first scholars to point out that Gloucestershire was notorious for military recruiting scandals in the 1590s. This might be what Shakespeare had in mind when he decided to send Falstaff there to recruit (and take bribes from) potential soldiers.