The speaker notices two squirrel nests on either side of a library entrance and starts wondering about the lives inside them. At first the questions are small and homely: are the squirrels neighbors, and does one pop over to borrow a nut? Then the imagination takes off. The speaker borrows the opening of Shakespeare's *Romeo and Juliet* ("two households, both alike in dignity, in fair Verona") and turns the nests into feuding families, with a pair of "star-cross'd kits" meeting secretly at night.
The humor comes from setting grand tragedy in a tiny, ordinary scene, and the library is a fitting stage for a story that plays with a famous play. The final lines soften the joke. The squirrels gossip about what patrons are reading, and their silhouettes behind the window become "a shadow-play for me to see." The mood is light, affectionate, and playful, and it shows a speaker who finds delight in watching closely and letting the mind wander.