It's a hot afternoon near Soledad, California, sometime during the 1930s. Everyone (or nearly everyone) is poor and scrambling around desperately for work, food, and money.
We meet Lennie Small and George Milton: two guys who are among the poor and the scrambling.
These two are dressed nearly identically, but there the similarities end. George is small and smart, Lennie is huge and mentally slow. We can tell from his dialogue and actions that he's got some major problems.
Lennie drops to his knees and drinks from a pool of dirty water, slurping out of it like a horse. George verbally swats him.
This is the dynamic of their relationship in a nutshell: Lennie acts like a kid, and George admonishes him like a parent. Make that a parent who swears a lot.
George reminds Lennie (and us) about where they are going and why: a ranch where they can buck barley for 50 dollars a month.
George also reminds Lennie why they lost their last job: something about a girl with a soft, red dress that Lennie liked to pet (the dress, that is, although technically, yes, the girl was in the dress at the time).
This "petting" is a major problem for Lennie. Lennie likes to pet things a little too hard and a little too long—an activity that keeps resulting in dead rabbits.
Lennie and George have an argument over a mouse that Lennie has petted a little too hard and long. Lennie wants to keep the dead mouse in his pocket, but George throws it away.
Then they argue about other stuff: Lennie wants ketchup with his supper of beans; George says there isn't any. Lennie threatens to go live by himself in a cave; George says what a great life he could have if Lennie did go off and live in a cave.
Aw, and now Lennie's feelings are hurt.
George makes it up to Lennie by telling him his favorite story, the one where they have their own ranch and Lennie gets to tend (and pet!) rabbits. As long and as hard as he wants.
That … sounds kind of horrific for the rabbits, actually.
George also reminds Lennie to come back to this spot by the river if anything bad happens, which suggests, of course, that something bad most definitely will.