Here's some Internet sites devoted to the game system to help those not familiar with it. I've added links to two of the better and more comprehensive ones to give you some flavor...
Peter - this is a quote from a post I made a couple of years ago when we got started on the T2K Adventure. The thread link is here: Twilight 2000 Campaign
Myself and others here have the full compliment of gaming modules to aid you in specific questions about geographic locations, status of forces, etc that might pique your modeling interest. What you can trust about any Internet site devoted to Twilight: 2000 is fidelity to the original game system. It's kinda like how the Star Wars Expanded Universe novels are written - all the authors work and agree to stay within the universe setup by the films and follow a code of what "can" and "cannot" happen within the novels they write. The SWEU is pretty interesting and flows because of that, even when one novel isn't as well received as the other.
T2K is the framework we all agreed to work within in this Campaign - but I'm sure as you find out more about the world in which these situations take place - you'll have endless opportunities for individual expression and modeling efforts.
To try to answer your questions in brief, T2K is a world where regional tensions erupted into an all-out Nuclear Exchange between NATO and WARPAC (hence known by us as the RED TEAM or demented evil baddies) in Europe. This exchange started out slowly, and built up in intensity until civilian manufacturing and population centers were destroyed. So much of the infrastructure was decimated that neither side could wage an effective or coordinated campaign against the other. Some areas, like the US West Coast, suffered heavy megatonnage strikes - like Los Angeles. Other locals, like the majority of England - went virtually unscathed. Some places are sites of vicious battles - like Texas - which separated from the US and formed it's own government. Which was thusly the prime route of a Mexican/Cuban Invasion.
In this world, few military units are left. Those that are, vary in strength. Soldiers desert and sometimes join roving bands of thugs plying and plundering what remains of civilization where ever they find it. Some military units are still fiercely loyal to the US Military Government - not so much to the US Civilian Government. There are caches of high-tech and fully operational weapons - including nuclear and laser beam weapons, hovercraft, aircraft, even orbital satellites capable of training their weapons back down upon the planet. There are caches of untold riches and wealth. You could run up upon a Los Angeles Class Submarine - and fight to take it, or encounter hobbbled civilians in horse-drawn buggies.
The technology and premise is based on what existed in the early 1980's and what was envisioned at that time for future ordnance. The nuclear exchanges began in 1997 and both sides petered out to inability to wage theatre level military actions against each other in the early summer of 2000. The player characters start out at this time, with the disintegration of their military and civilian structure - left to fend for themselves where ever they happen to be in the world.
T2K has got it all - except for aliens. They wouldn't make it in this crazy world...