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Before the game, the group must decide or create the setting and create player characters. Alternatively, the game master can prepare the whole adventure. Of course if the game is a continuation from previous sessions, everything is taken care of and the game master only has to prepare the adventure before the game can continue.
At first, the group decides on a setting. The simplest of course would be to choose a pre-existing setting for Lite, like those included in the Settings section. You can also adapt other settings to Lite. How that works is described in the chapter Customizing Lite
The setting defines the genre and all important details of the game world. The basic points are noted down in the Setting sheet. In the selection process, all players and the GM should agree upon genre conventions and the style of adventure. It can often be helpful to use well known books and movies as examples. For this decision, all players should participate.
Are setting and style of adventure decided, each player creates their character. This also should be a done as a group, so that all characters are compatible and can be played alongside and with each other. Details of what characters are and how to create them are described in the chapter Characters. Each character is documented in the character sheet.
This part is wholly the responsibility of the game master. They either take a prewritten adventure or write their own. Tips as to how to best go about this can be found in the chapter creating adventures.