Machines built by man have taken over and are using Humans as sources of energy. They are bred on farms and are controlled by a huge computer which incorporates all humans into a dream state reality, where the computer has "agents"..who can go in an alter the "reality". Some humans are free and free others, then go back into the Matrix(the computer and program) with the ability to alter the program to suit them. Neo is freed by Morpheus because Morpheus thinks Neo is the chosen one who can totally ignore the computer input and say..run at 100mph, jump huge distances. The problem is the human mind can get fooled and the agents can kill em. Most when they think they have been shot, die, literally. Neo, learns he cannot be killed and begins to kick the agents ass. They flee and he is last seen talking on a phone to the computer and flying up up and away.
Hope this helps