The poem begins with a single, solitary cloud floating slowly over the English countryside. You don’t often see one cloud off by itself, but that seems to be the case here. The cloud is like a lost child wandering in through a shopping mall: "Would the mother of the lonely cloud please come claim her child!" The cloud floats over a part of the countryside with hills and valleys, so this is not flat farmland. If we were going to bring in Wordsworth’s biography into the mix, we’d say that this is the famous Lake District where the poet lived much of his life. But we’re not going to do that, so we’ll just call it some kind of region (a district, perhaps?) with lakes. You should feel free to come up with your own setting for the poem. Where do you picture the speaker catching this vision of never-ending daffodils?
The main body of the poem is dedicated to the image of the daffodils. They are stretched in a line around the bay of a lake, bordered by the water on one side and trees on the other. The day is windy enough to create waves on the lake, and to make the flowers bob up and down in concert.
At the end of the poem, the setting shifts indoors, to the speaker’s couch, where he sits bored and staring off into space. We’re made to understand that this happens quite frequently. Then we go inside the speaker’s head and see the same image of the dancing daffodils in his spiritual vision, followed the image of his dancing heart.