Where It All Goes Down
We don't get a lot of specific details about where this poem takes place, but we do get a really strong feeling for the atmosphere. From the little bit of detail we do get, we know this is a place where friends get together to eat and drink. For example, the first speaker in the poem teases his buddy Terence for gulping down his drinks: "There can't be much amiss, 'tis clear/ To see the rate you drink your beer" (3-4). Clearly they're in a place where guys drink and joke together, and where they could dance, too: "Come, pipe a tune to dance to, lad" (14). Sure, they could just be in someone's kitchen, but when you put all these details together the vibe we get seems more like what you'd get in a bar.
The English would call this a pub, a place to throw back a beer or two and eat some simple, hearty food. But you could imagine this taking place in any neighborhood bar—like Cheers, somewhere to gather and talk and crack jokes and even (in this case) recite a poem or two. It's the setting that helps decide the tone for the whole poem. Instead of fancy words or high-fallutin' philosophy, we get a jokey argument, a drinking story, and a spooky old legend. Housman is using the local bar as a way to prove to us that poetry doesn't have to stay in an ivory tower. It can work its magic anywhere.