The Giver takes place on Earth (presumably in the far future) in a setting known simply as the Community, which is similar to other communities not terribly distant from it. Here life is completely free from worry thanks to "Sameness", a philosophy that strives to eliminate any possible want or need from human existence.
Children are born to anonymous Birthmothers, and are monitored from the moment they leave the womb. Everyone and everything is designed to be supportive, helpful, encouraging. All your major life decisions as an adult — your career, your spouse, when you can raise children and who those children will be — are made for you by the Committee of Elders, based on careful observation of your particular needs and aptitudes. Citizens live in symmetrical family units of four: two parents, one boy, and one girl. (When young teenagers first reveal "the Stirrings," their mothers hand over the pills required to counter them.) As soon as their children are grown, the adults are sent to an area for Childless Adults, and when they reach a certain age they are to be cared for in The House of the Old.
There is no dissension at all. People have even been bred to look the same (red hair and/or blue eyes are borderline freakish), and most have lost the ability even to see color (ergo, blue eyes are called "pale eyes" and red hair goes unnoticed). The population lives by a set of Rules that govern even the smallest detail of their daily lives — and if any single person breaks one, a loudspeaker immediately "reminds" the entire community. Precision of language is drilled into children as soon as they begin talking, so that there can be no possible misunderstanding; any slight remaining difference or deviation is just not discussed (this includes any mention of the Stirrings, naturally).
Anyone who cannot or will not conform - the very Old, the handicapped, people who break the Rules three times - is "Released to Elsewhere", vaguely understood to mean sent somewhere outside the Community.
No-one in the community even has a frame of reference to question this way of life - including our protagonist, Jonas, who at the book's opening is preparing for his Ceremony of Twelve where he will be assigned his future career. Jonas is one of the slightly-different; he has blue eyes and can see color, even though he doesn't know what it is yet. It is because of this ability "to see beyond" that he is chosen to be the successor to The Receiver — now the Giver — of Memory, the one person in the entire community allowed to know what's beyond it. Or at least, what used to be.
Turns out, perfect painlessness isn't as easy to maintain as it looks. There are still memories of the time before Sameness, when people still knew want, and grief, and pain... and happiness and love.
All those dangerous memories have to go somewhere. By a process never quite explained, the Receiver keeps them all stored in his head to protect his community at large from being overwhelmed by them, from learning of the mistakes humanity once made. Eventually this one must pass them on to a younger Receiver, for if the Receiver were to die - or otherwise leave the community - while in possession of the memories, they would fly free, everyone would remember, and the Sameness would be shattered.
Thanks to his new position, young Jonas is exposed to how life used to be, and slowly but surely grows to believe it was better that way. His dilemma comes to a head when he discovers he's now allowed access to the most secret ceremonies of his community, including the Ceremony of Release. Excited to peek in on his gentle father at work as a Nurturer of newborn babies, Jonas instead finds himself watching him cheerfully kill a newborn twin with a painful lethal injection, simply because "having two identical people running around" would disrupt community harmony.
The Giver calms a horrified Jonas by explaining that he too has been looking for a way out for years, and helps Jonas plan how to run away. The memories Jonas has absorbed by then will be released to the citizens of the community he's left behind, and The Giver will help them understand and cope with them. These carefully-laid plans, however, are abandoned when Jonas gets word that baby Gabriel, whom Jonas' father had brought into the family especially to try and help him meet the development goals, is to be Released as a failure the next day. With no other choice, Jonas takes the little one and runs for it into the harsh, cold world beyond, leaving us with only the sequel to reassure us they don't die.