There's no one real setting to speak of in Proverbs, since it's, uh, a collection of proverbs. But we should probably note here that it was an evolving document that might've come out of a few different historical landscapes:
First, we've got ancient home-style wisdom, popping up out of patterns of living that were common throughout the Near East (i.e., tight-knit, rural, farming communities) and which endured for roughly a millennium, beginning more than three thousand years ago.
Greatest hit: "Those who till their land will have plenty of food but those who follow worthless pursuits have no sense" (12.11).
Translation: Farming is for winners, kids.
Settle It On the Court
Next up, we've got courtly proverbs, likely crafted by Israelite sages hanging out in the short-lived Israelite monarchy. Ancient Near Eastern civilizations had a soft spot for scribes and sages, and it was common practice for successful monarchies to fund small circles of sages who would glorify their reign through the pursuit of knowledge (or mooch off the king's dime...depending).
So, in Proverbs 25:1, we hear that this next batch of proverbs was copied by the officials of King Hezekiah. And there's a whole lot of courtly hullabaloo in view.
Greatest hit: "Do not put yourself forward in the king's presence or stand in the place of the great, for it is better to be told, 'come up here,' than to be put lower in the presence of a noble" (25.7).
Translation: Know your place, underling. (Hey, sometimes the truth is a little harsh.)
The last phase of development (maybe) comes after the Israelite monarchy was tanked by the Babylonian Empire in 586 BCE and sages had to self-organize, rather than living a cushy courtly lifestyle. Things were a little rougher for the Israelites, and the proverbs switch in tone from "how can I be the best farmer/courtier ever?" to "what does it mean to be truly wise?" Things get a little less explanatory and a little more esoteric.
Greatest hit: "Three things are too wonderful for me; four I do not understand: the way of an eagle in the sky, the way of a snake on a rock, the way of a ship on the high seas, and the way of a man with a girl" (30.18-19).
Translation: Turns out even the wisest guys can't talk to girls.
Ah, well. Some things never change.