Two brothers, Shahrayar and Shahzaman, rule over separate lands (India/Indo-China and Samarkand, respectively.) They love each other dearly, but could not rule together because of succession laws. So after living ten years apart, Shahrayar sends his chief advisor (his vizier) to summon Shahzaman to India for a visit.
During the time that Shahrayar's vizier is camped outside Samarkand, Shahzaman visits him. When the latter returns to his palace, he finds his wife in bed with the cook, and murders them both before leaving to visit his brother.
However, in India, Shahzaman finds Shahrayar's wife in bed with a slave. Both brothers have been cuckolded. The brothers lament their misfortunes, and leave the city together in search of a man who is more wretched than they are.
On their quest, they encounter a demon which emerges from the ocean with a glass chest containing a beautiful woman. While the demon sleeps, the demon's woman sleeps with each brother, and then takes their rings to add to her collection - she has amassed 98 rings from 98 lovers, all meant to show scorn for the demon who keeps her trapped. Happily realizing that the demon's misfortune is clearly worse than their own, the two brothers return to their kingdoms.
Back in India, Shahrayar orders his queen killed, and swears to marry a new woman each night before killing her the following morning so she can never betray him. He continues this horrific process for quite a while.
Eventually, his vizier's daughter, Scheherazade, decides on a scheme to end what she considers a barbaric practice. Against her father's advice and warnings, she marries Shahrayar, and orders her little sister, Dinarzad, to find her on her wedding night and ask her to tell a story. Her plan is to tell a different story each night, always ending mid-tale so that Shahrayar will keep her alive to hear the endings. Each subsequent night, she will complete the previous night's story and begin a new one, again leaving off to keep him intrigued and herself alive.
The scheme works immediately, and continues for, as the title says, one thousand and one nights, until the king's mind is finally changed and he accepts Scheherazade as his permanent wife.
The frame story of The Arabian Nights is one of its most intriguing aspects; it has set the stage for numerous frame stories in literature, television, and film. A common example is Frankenstein. Obviously, the inner stories comprise the bulk of the text - that's the nature of frame stories - but this frame provides a new context for the stories that are going to be told.
In truth, most of these stories existed for a long time in the oral tradition before this collection was ever passed down or published - what makes The Arabian Nights so important is that it not only collected them in one place, but also used the frame to imply a coherent whole. This particular frame story structure can trace its roots back to the Old Kingdom of ancient Egypt, sometime around 2300-2100 B.C. While different collections of The Arabian Nights feature not only different stories but even different versions of the same stories, the frame story tends to be pretty consistent amongst them, particularly the device of Scheherazade's scheme.
Further, this frame not only links the stories, but implies a level of stakes to them. That is, if the stories are not engaging enough, then Scheherazade will lose her life, as will many women after her. For many scholars and readers up through the post-modern era, it also functions as a comment on storytelling itself. The idea of a woman telling stories for her life implies both the importance and inherent fallibility of storytelling. Not only does the conceit imply that stories are more important to culture than for their pure entertainment value, but it also suggests that the storyteller always shapes the story to her purposes. Here, Scheherazade must shape her tales to secure her survival. While the stories within the collection rarely reference these qualities, the frame almost necessarily draws the reader or hearer's attention to the active participation of the storyteller, albeit implicitly.
Of course, one should not ignore the entertainment value of the stories. In fact, Scheherazade only succeeds because the stories are compelling. Even in this relatively straightforward (and kind of tense) story, there is an aside with a demon who emerges from the ocean. The stories willfully embrace spectacle and the supernatural, largely because that makes them more engaging. Stories can only produce a greater effect if they are worth listening to; this is another implicit argument made through the use of the frame story.
Though we still know very little about her, much of Scheherazade's character is revealed through her scheme. She is clearly resourceful, but is moreover quite well-versed in the stories of both her culture and those surrounding it. (These tales derived from the conflux of many different civilizations over the centuries.) In Sir Richard Burton's translation of this collection, she is described as having collected a thousand history books about antique races and departed rulers, and having studied and learned many poems by heart. Finally, her selflessness cannot be disputed; it is doubtful that the king would have gone after his vizier's daughter himself, meaning she is willing to risk her life voluntarily for the sake of women throughout the realm.
Scheherazade's virtue and capability is particularly notable considering how women are portrayed elsewhere in this frame and in the following stories. Here, women are presented as almost entirely without control - both of the men's wives are found in bed with servants. Further, their lack of political power is clear, since the law not only allows but practically mandates their deaths for such betrayal. (Note that the men sleep with the demon's woman with hardly a second thought.) And most upsetting of all, Shahrayar is free to murder one woman each night without any fear of reprisal. These attitudes are certainly indicative of the culture in which the stories were collected, and applying a contemporary perspective to them is only of limited use. However, it is important to note that Scheherazade finds a way to express her rights, and protect other women, without effectively changing her society. Her fierce individuality, singular cleverness, and apparent charisma make her into a champion for women, who transgresses without effectively altering the attitudes of her society. (That a happy ending is implied in Shahrayar's change of heart should not be read as a victory for woman's social or political rights.) Ultimately, she is more clever than the king is, which makes the frame's attitude towards woman more complicated than it initially seems.
The two brothers' fascination with the misfortune of others is fascinating and distinct as well. Shahzaman is only consoled when he realizes that his brother has it much worse than him, and the two brothers in turn are only truly happy once they locate a man who is more unfortunate than even the two of them. Though the story makes no explicit comment on their small-mindedness, this situation offers one of the collection's early illustrations of human contradiction. Their quest is an expression of an exaggerated shame and pride, thereby establishing the collection's interest in probing the nature of mankind through intense situations.
Are they villains for these vices? They are not quite portrayed as such, which sets the tone for the rest of the collection, which forgoes melodramatic representations in favor of more grounded and contradictory depictions of humanity. Both brothers come off as more naive, greedy, and selfish than particularly cruel or diabolical. What Scheherazade does accomplish through her stories is a transformation of the king; he becomes a better person. So again, the stories are not meant to be viewed through a political lens but rather than a humanist ones. Stories might not be able to change the world, but they are capable of changing us by making us look at ourselves in new ways.