The poem takes place in the "realm of nonsense." It might be tough to find this kingdom on a map, but Dryden, via old king Flecknoe, gives it a shot (check out lines 139-144). The realm's capital city, where Shadwell is ultimately crowned, Dryden ironically calls "Augusta"—an impressive-sounding, regal name that's basically just a stand-in for an especially grungy version of London. He mentions actual London neighborhood and street names throughout the poem, though, grounding this fictitious "realm of nonsense" in real-life geography, but this Augusta seems even more rundown and lowbrow than its real counterpart.
Dryden wrote "Mac Flecknoe" sometime in the late 1670s, squarely in the middle of what historians and critics now call the Restoration Period. Though this period marks the start of the Enlightenment in British history, by the sounds of "Mac Flecknoe," Dryden certainly didn't seem to find his fellow writers to be so enlightened. Dryden was a pretty important part of this seventeenth-century English Restoration literary scene, and this poem's settings allow him to focus squarely on those goings on. In "Mac Flecknoe," he dishes out critique after critique to pretty much all of his notable contemporaries, and especially to the very unfortunate, totally destroyed Thomas Shadwell.