Where do you believe this lottery is taking place? Based on the outcome of the story, what do you think the author is saying about the people?

I believe the lottery in this story is taking place in a small town in the northeast United States.
Some of this is based on explicit statements, like the way Jackson calls the place a "village." This refers to small settlements. Some of this is based on the names of the characters in the story. The names are either English (Summers, Graves) or French (Delacroix) in origin. This fits the New England area. Some, like Hutchinson, were actual names from Puritan history. New England is one of the few places in the United States where historical traditions are well enough established to support a ritual like the lottery, which is old enough to have sayings and superstitions about it.
Based on the outcome of this story, I believe Jackson is saying people can follow social pressure and established traditions too far--that they are willing to kill or die to follow them.