The novel is about schoolboys in Józsefváros neighbourhood of Budapest and set in 1889. The Paul Street Boys spend their free time at the grund, an empty lot that they regard as their "Fatherland". The story has two main protagonists, János Boka (the honourable leader of the Paul Street Boys) and Ernő Nemecsek (the smallest member of the group).

When the "Redshirts"—another gang of boys, led by Feri Áts, who gather at the nearby botanical gardens—attempt to take over the grund, the Paul Street Boys are forced to defend themselves in military fashion.

Although the Paul Street Boys win the war, and little Nemecsek repeatedly demonstrates that his bravery and loyalty surpasses his size, the book ends in tragedy.

While very popular in Hungary, the book is also one of the most famous Hungarian novels outside the country. It has been translated into many languages, and in several countries, it is a mandatory or recommended reading in schools. The first English translation was made by Louis Rittenberg and published in 1927, and later revised by George Szirtes for a re-release in 1994.

Erich Kästner took up the theme of two groups of boys conducting a "war" and using all the terminology of militarism and nationalism in "The Flying Classroom", published just before the National Socialist German Workers' Party won elections in Germany. Kästner was, however, less harsh with the character resembling Nemecsek, who in Kästner's version suffers no more than a broken leg.

In Israel the book, in Hebrew translation under the title Mahanaim (Two Camps), was highly popular in the 1940s and 1950s, and recently a new translation was published. The Israeli left-wing columnist Haim Bar'am, of the Kol Ha'ir weekly in Jerusalem, wrote: "The highest praise which I can bestow on a pure-hearted, idealistic person is to compare him or her to Nemecsek. I don't often do that, only when I feel that somebody truly deserves the ultimate compliment."