The adventure will take place in the Karameikos, around 995 AC.
My vision of Mystara is somewhat different than what you find on sites like Pandius. The Grand Duchy of the Karameikos is very much a "borderlands". The city of Kelvin (where the adventure starts) represents the 2nd largest city in the Duchy, behind Specularum, with around 2000 inhabitants. Nearby towns are the elven village of Rifllian, the town of Threshold, the Dwarven community of Highforge, and the old Traladaran capital of Krakatos.
There are no "Gods" in Mystara. There are Immortals, and some are worshiped, but they do not grant spells to worshippers, rather Cleric spells come "from within" the cleric, so to speak. Clerics would most likely be of one of the two major churches in the Karameikos, the Church of Traladara and the Church of Thyatis. Temples of both can be found in most cities.
There are 3 Immortals which are of note in the Karameikos. Petra, Halav, and Zirchev; all of which have storied pasts and much tradition in the region. To speak ill of them is to incur the wrath of the locals. They are quite fond of these three.
The Karameikos is technically part of the Empire of Thyatis, but is virtually autonomous. The traditional occupants, known as Traladarans, still have some bad feelings towards those of Thyatian descent. However, strong efforts by Duke Stephan over several years have reduced tensions and brought peace and acceptance between the native Traladarans and the Thyatians.
Muggins is a farmboy from Kelvin; He traveled a bit with a mercenary troop (if there is such) to gain his fighting-man experience. Once his 'tour' was over, he went back home with his spoils (read: starting equipment) to seek the next chapter in his life.