I see the lights of the village Gleam through the rain and the mist,
We already know what time it is, and now we get a sense of where we are.
Apparently, the speaker is looking out over a village. It's a rainy, foggy night, but he can just see the village lights shining in the dusk.
Again, we think this is a really strong image. Without having to say who he is or where exactly he's standing, the speaker allows us to see what he sees, to imagine the rainy night and the little town.
And a feeling of sadness comes o'er me, That my soul cannot resist:
The darkness and the rain leave him feeling a little down.
All of a sudden, as he stands there, a "feeling of sadness" creeps into his soul, and he doesn't feel like he can stop it from sinking in.
So, to sum it up, in just eight lines we've learned the time, the place, and the way the speaker is feeling about it. The scene is basically set.