The setting is post-apocalyptic America, where casual violence has become more the norm than it even is today, and where the professional sport of autoduelling exists; drivers enter armed and armored automobiles in arenas and blast away until only one remains (like demolition derby, with guns). But outside of these arenas, many people drive cars like this around, especially in the most dangerous parts of the country and the world.
Car Wars, in the style I played it, had a feel similar to that of films like Mad Max. The world is dirty, barbaric and violent, and you're just trying to stay alive in it. It's an enjoyable game, very much a beer & pretzels game like Battletech. It isn't really a good RPG (though rumor has it that GURPS Autoduel, which uses Car Wars' setting is still around, and that there may be a revision on the way), but if you're just looking for a way to blow an evening, there are certainly far worse ones.