Fairies sing a song over the burial monument of Diarmuid and Grania. They sing that the pair is "old and gay," and ask for them to be given rest away from human life.
The fairies say that they are also old and gay, maybe thousands of years old.
Yeats begins the poem with a play on the cliche "old and gray," describing the mythical pair as "old and gay." This demonstrates a nostalgia for the ancient Irish period of heroes and scholars, and, importantly, the lack of a British presence in Ireland.
Diarmuid and Grania belong to an ancient Irish tale. Diarmuid was an infantryman in the army called the Fianna, which fought for the ancient hero Finn MacCumhall. Finn wanted to marry Grania, but she ran away with Diarmuid. Finn eventually killed Diarmuid, and thus regained Grania's attentions for himself.