Mr. Jones is drunk. Again. He owns Manor Farm, by the way. Also, the animals talk. Work with it.
"Old Major" is a sort of revered, older, wiser boar-pig-dude on the farm. He has a dream, and the others, acknowledging his age, wisdom, and all-around general superiority, gather around (campfire-style) to listen.
The cast of characters is introduced. You've got Jessie, Bluebell, and Pincher (three dogs), Boxer and Clover (horses, male and female, respectively), Muriel (a goat), Benjamin (an old and cynical donkey, good friends with Boxer), Mollie (a silly mare), Moses (a raven), chickens, hens, ducks, two turtledoves, and a partridge in a pear tree.
Old Major suggests that they have an uprising against the lazy, resource-sucking capitalists—ahem, we mean humans—and run the farm themselves.
He introduces some rules for the animals about loyalty (have it), alcohol (don't drink it), money (don't use it), and killing other animals (um, don't do it).
Get out your highlighters, Shmoopers. We have a feeling these rules are going to be important.
After this rousing vision of equality, all the animals sing "Beasts of England," a lovely tune eliciting warm and fuzzy feelings of togetherness.