Sula is set in the Bottom, and most of the story takes place in the first half of the twentieth century. The residents of the Bottom are African-American and have to deal with constant discrimination and racism (check out the Shmoop US History guides to "Jim Crow in America" and "Civil Rights Movement: Struggle for Integration" for good discussions of racial relations during these years.
Many of the characters struggle to make ends meet. The construction of a new tunnel brings hope, with the promise of work for black townspeople, but this chance for work never materializes for them. Instead, the unfinished tunnel looms as a constant reminder of the racism they face.
The Bottom sits above a valley occupied by middle-class whites. Although they live in close proximity, blacks and whites rarely interact with each other in the novel. When they do, the encounters are marked by racial tension. For example, when Ajax goes to the jail to find out why Tar Baby (who is white) is there, then complains that he's been mistreated, the policeman suggests that Tar Baby act "respectable" and go live with other whites.
The neighborhood is one of those places where everyone knows everyone else; they gossip, judge, and get involved in each other's business. There is little privacy when it comes to things like family matters, relationships, arguments, and financial problems. The upside is that there is always someone there to lend a hand.
The homes of Sula and Nel represent two very different worlds: one messy and chaotic, the other contained and quiet. Sula's house is always filled with people, including her family and the boarders who come and go. Because of this, she's often left to her own devices. Nel, on the other hand, lives in a house in which her every action is monitored. She is forced to constantly be clean, quiet and aware of everything she does. Each girl is attracted to the other's house for the different world it offers.