The setting is a steampunk Victorian era England. The backstory of the game has some similarities to William Gibson and Bruce Sterling's novel, The Difference Engine, also set in an alternate history Victorian age.
A time traveller on a reconnaissance mission from the distant future became stranded in England of the late 1800s, and his technology came into the hands of the Royal Society led by Baron Fortesque (based upon Charles Babbage), a grand inventor. Fortesque then retro engineered many of the futuristic contraptions, creating an entirely different, alternate timeline.
Baron Fortesque then succeeded in his greatest creation yet - the Chaos Engine - which was able to experiment with matter, and the very nature of space and time. Unfortunately for the rest of the proud kingdom, the Engine then proceeded to become sentient and captured and assimilated its creator, then began to change the countryside for the worse. Vile monsters and destructive automata appeared everywhere, and even prehistoric beasts were resurrected. Telegram wires connecting the British Isles to the European mainland are cut, and any ship attempting to enter a British port is attacked. The British Royal Family, along with members of Parliament and a large number of refugees manage to escape across the sea, bringing with them many tales of horror. The British Empire is left in tatters, and the world in economic and political chaos. This lures a number of mercenaries on a potentially rewarding quest to infiltrate the quarantined Britain, find the root of the problem and swiftly bring a full stop to it.