The opening credits let us know exactly what time to set our wayback machine. As the theme plays, we see images of Martin Luther King, Jr., James Dean, Marilyn Monroe in Playboy magazine, and a Ford Thunderbird. We're soon transported to Rydell High, 1958.
Grease was made in the 1970s, but it looks back with nostalgia at the 1950s, a time when the hair was greasy, the skirts were long, racism was rampant and there was no such thing as equal pay for equal work. The 1950s was a time all about keeping up appearances, and everyone was supposed to look and act wholesome, as if they just stepped off the set of Leave it to Beaver. Take a listen to the principal's announcement before the dance contest.
PRINCIPAL McGEE: Anyone doing tasteless or vulgar movements will be disqualified.
Seeing what dancing is like in the 1950s helps put the "dirty" dancing of Dirty Dancing in the 1960s into perspective.
But while Rydell High is trying to be a piece of white bread like Pleasantville on the surface, underneath the sexuality simmers. In nighttime scenes, we see what the wholesome teens of Rydell High get up to after hours. If the Thunderbird's a rockin', don't come a knockin'.
A movie like Grease would never have been made in the 1950s. Those were the movies that were 100% wholesome fantasy, with only a suggestion of reality underneath, if they mentioned it at all. But through the benefit of hindsight, Grease, a musical with a character named Cha Cha and a flying car, manages to be much more realistic than the movies of time period where it's set.