.....basically, we are all living in a 'false world' - generated by computers.
Machines are now 'masters' of the world and feed off the electrical energy created by humans (who are kept in little pods). To prevent human's becoming wise to this, they are 'fed' computer generated 'dreams' - and this is the world we think is real.
Some human's have discovered the truth, and have broken away from their pods and travel about in a ship - their connection to/from the computer generated world is via a telephone. They search for the one person (Neo) who they believe can release all human's and rid the world of the machines. The machines know about this, and hunt for these people (in the guise of agents)
Make sense now?