Earth's skies are filled with dark, rainless clouds that eternally blot out the sun. These clouds were created by humanity, who attempted to block the Machine's primary energy source through the use of exponentially multiplying nanomachines sprayed into the upper atmosphere. With the lack of sunlight, all plant and animal life died and the world withered away, leaving a dark, cold desert of steel, dirt and debris.
It is presumed that every major city on Earth was destroyed by conventional or nuclear bombardment, or otherwise rendered uninhabitable over the course of the Machine War. Yet intelligence remains. One human city survives: Zion, located in deep caverns close to the planet's core for warmth and power. Zion is secreted away from 01, the machine city, whose inhabitants are unaffected by the lack of warmth or sunlight, as they derive their needed energies in part from many skyscraper-like cylindrical towers holding billions of synthetically-grown humans used for bioelectrical generation. The minds of the humans within the power plant are all but convinced that they conduct a normal life sometime at the end of the 20th Century of the past, in a neural-interactive virtual world known as the Matrix.