On the surface Fuyuki seems like a fairly normal city to live in within Japan, with one half featuring western-style architecture and the other traditional Japanese-style construction. Much of the rest of the world seems fairly average too, but many things go unnoticed by the casual looker. Things such as the existence of magic and forces beyond anyone's true comprehension.
Fuyuki City is actually the site of the Holy Grail War, an organized fight to the death between seven 'Masters' that command their respective Heroic Spirit 'Servants,' Familiars made from the souls of noteworthy figures humanity has exonerated into legends. These seven Servants retain their abilities from life but draw on their Master's mana to use them and even to continue to exist, and are forced to obey their orders through the three Command Spells Masters are given by the Holy Grail. The Servants often hide their names and iconic abilities and weapons, instead going by the 'Class' assigned to them by the Holy Grail:
Saber, Lancer, Archer, Caster, Assassin, and Berserker. As Heroic Spirits have all been recorded in history, their abilities and weaknesses are all publically known...
The Holy Grail is said to be well-worth the risk. Even if it is NOT the sacred cup that received the 'blood of Christ,' it is a potent magical artifact said to be able to grant the user's wishes, whatever those may be. However, it was supposedly destroyed twice... once in the 4th Holy Grail War, though its true essence was almost fully obliterated in the 5th Holy Grail War by the winners. Yet, through unknown means the Holy Grail has reappeared and begun to choose Servants, this time erratically-- ever since Unification, that is.
NOTE: This particular version of Fate/Stay Night portrays a 6th Holy Grail War taking place in the Multiverse, following the events of the "Unlimited Blade Works" route in the Visual Novel. Additionally, although it is technically a separate theme from Fate/Stay Night-1, the themes are not entirely unconnected metaphysically and the fate of one world is not-uncommonly entangled with the fate of the other.
Also, as a response to the massive threat the Multiverse presents, a number of independently operating Counter-Guardians have been activated by the Beast of Alaya, separate from the 6th Holy Grail War in both worlds. They have a vested interest in protecting most (if not all) variations of their own world, and consider the Custodians their prime targets.