This gem of a short story is a gift – specifically, a wedding present from the narrator to Esmé, a very special young lady. We learn that the narrator, a writer, promised Esmé that he would write a story for her someday, and, on the occasion of her wedding (years after the original promise was made), he finally makes good on his word.
The younger Esmé, an avid reader, hilariously claimed that she was very interested in "squalor" – and as a result, we have a story that claims to embody both "Love and Squalor." The "squalor" refers to the narrator's experience of World War II and its aftermath; in the second half of the story, the narrator (not so cunningly disguised as Sergeant X) reflects upon his near nervous breakdown following the war. Here, we see that the story is not just a wedding present, but also a thank you gift: it's the narrator's way of telling Esmé how her youthful determination gave him hope and helped him get over the trauma of the war.