Strange Meeting Setting
Let's just be straight up about it: this poem takes place in Hell. Owen doesn't tell us that right away. He opens by describing the tunnel that the speaker has fallen through, a tunnel that had been (figuratively) carved out by all the terrible wars in the history of the world. Apparently this tunnel feeds into a very special place in hell where fallen soldiers get to spend forever and ever in a cauldron of misery.
While Owen doesn't spend a ton of time describing hell (no mention of fire or heat, and not a single cameo appearance of the devil), he gives us enough info to know that everyone there is sufficiently miserable:
Yet also there encumbered sleepers groaned,
Too fast in thought or death to be bestirred.
Then, as I probed them, one sprang up, and stared
With piteous recognition in fixed eyes,
Lifting distressful hands as if to bless. (4-8)
This version of hell is inhabited by some miserable and shady characters. We're not sure what the speaker is doing trying to get their attention by probing one of them, but now that he's made eye contact, he's really in for it.
"With a thousand fears that vision's face was grained" is how Owen describes the second speaker. He probably looks, oh, about a thousand times worse than he ever did on his worst hair day. But this is hell, after all, and what would hell be without eternal ugliness and suffering?