The game is set in the village of Iwagakure. This is alternate-cannon, IE: Naruto with no tales beasts. Or possibly, they haven't shown up yet.
Iwagakure is nestled in the middle of a mountain range, protected from the elements and attack by steep cliffs on three sides. To the east lies an open valley where most of it's fortifications are. The village itself is perilous, with buildings built on pillars of stone and separate cliffs built into the sides of the village. The center hub of the village is simply a large round pillar with bridges leading off, connecting the village. Most of the houses are carved from the rock itself, and many essential services provided to the villagers, both ninja and non-ninja, are hidden within natural and carved caves built into the walls to make them easier to defend.
The first Tsuchikage, who founded the village forty years ago, is now getting on in his years. He has done much to protect the village he founded, losing an arm in battle against Takigakure.
Iwagakure has few relations with other villages, keeping the location of their village a highly guarded secret. Takigakure, located in a neighboring country, has repeatedly made incursions in an attempt to locate it, but only discovered forward outposts. Combat with Takigakure always ends in blood on both sides, although Iwagakure has been winning by virtue of sheer numbers.
Supplies are routed in through a secret, well guarded path to the south, mostly from Bird Country. Iwagakure barters it's protection from Takigakure to the natives of Bird in order to ensure the supply of food is plentiful, as all the countries surrounding Takigakure fear their constant war parties.
Within the village, the first Tsuchikage is causing issues - his wife was killed before the founding of the village, when they were still young, and he has remained faithful despite her death, refusing to take another wife. It's caused massive issues within the upper ranks, as older advisers thrust young candidates for the Tsuchikage's training. Eventually, he will die, and replacement needs to be found and trained. Even within the walls of the academy, sensei's frantically seek out those who show promise, tutoring them in hopes that they'll be the one.
Miles away, in the Capital, the Daimyo works on his own plots. He has publicly proclaimed his distaste for the secretive nature of both the Tsuchikage and Iwagakure in general, and in his audiences with Iwagakure ninja he schemes into getting one of his own men into the village.
