On an alternate future Earth, there is no longer any war between nations. Peace reigns over the entire planet. However, it's been found that people need the tension and excitement of war -- even experienced vicariously -- to truly feel alive. To fill this need, staged "wars" between various corporations provide the excitement and nervous tension that actual wars had provided. The Sky Crawlers follows the events of one group of young pilots working for one of the corporations as they engage in aerial dogfights with pilots of another corporation.
These pilots are apparently-young men and women called Kildren, who are destined to live eternally in their adolescence. How old they really are during the events of the movie is never revealed, but it is implied that they are clones, and that after they are killed in combat they can return to fight again, although with new memories and unaware of their previous lives. One of the pilots describes their existence as like living in a hazy dream.
Created by accident while a rival company was experimenting with genetic manipulations to produce a new drug, the Kildren are conscious that every day could be the last, because they fight the war as entertainment, organized and operated by adults. But as they embrace the reality they are faced with, they live their day-to-day lives to the fullest. They live in constant fear of meeting "The Teacher" in aerial combat, as this mysterious actual adult man is unbeatable and has shot down every rival pilot he's faced.
If the pilots survive long enough, they gradually come to realize part of the truth of their existence, which leads to anger, fear, resentment and in one case -- murder.