In the future of Circuitry Man, set in 2020, the Earth has suffered a total environmental catastrophe. A written prologue establishes that forty years prior, the oceans died and the last tree fell, leading to an unbreathable atmosphere that forced humanity into government-controlled subterranean environments. These underground cities, specifically Subterranean Los Angeles and New York, are connected by dark tunnels and parking-lot-like highways, while the surface remains a lawless desert wasteland populated by gangs and "pool sharks."

The societal dynamic is defined by a shift from chemical to digital addiction. Traditional drugs have been replaced by narcotic microchips that plug directly into the human brain to provide sensory stimulation. This world features advanced but gritty biotechnology, including "bio-mechanical" androids like Danner, a pleasure droid with artificial memories programmed into him for manipulation. The central conflict involves the smuggling of these chips, which represent the primary currency of the underground black market, while characters navigate a surveillance-heavy yet fractured social order.

Technologically, the film’s vision of 2020 features direct neural interfaces that are far more invasive than modern equivalents like Neuralink, depicted as physical ports embedded in the skull. The villain, Plughead, uses these sockets to tap into the minds of others, reflecting a late-80s anxiety regarding the loss of mental privacy to computer technology. While the film's prediction of total ecological collapse within 30 years was far more extreme than reality, its depiction of digital escapism and the commodification of neural stimulation aligns with contemporary discussions regarding the "attention economy" and virtual reality. Retrospective analysis notes that the film's reliance on physical cables and plugs has been largely bypassed by the real-world development of wireless and Bluetooth technology.