This is like an alternative present or future where the red-light district has revived in Japan...I think ╮(￣▽￣)╭
That confused me, too. Like the dream Kakerou had and that truck he tried to escape with? But its probably really more like fantasy than historical?
This^^ It's explained in the beginning but it's not super clear.
http://www.mangago.me/read-manga/mede_shireru_yoru_no_junjou/mf/v01/c001.1/13/
I think it is in modern times but the red-light district tends to keep traditional clothing and houses, to keep the "feel" of the traditions and norms of this industry...
I cannot figure out the time period. The clothes, buildings, photographs, cars and other stuff don't match up with the 17th century dates, plus he mentioned blood types which they wouldn't have known back then.