In the movie universe, in 1983 there was a terrorist attack that has stopped all the real-life changes which culminated in the fall of the Iron Curtain. The current action of the movie takes place 20 years later, in 2003, but there are occasional retrospections looking back to 1983.
The title is, of course, a nod to the George Orwell book '1984', which describes a world in a perpetual state of war, omnipresent government surveillance and propaganda.
Since the OP was a bit confused about the dates, let me put them here:
- 1918 - Poland regains independence after 123 years after being
partitioned between Germany, Austro-Hungarian Empire and Russia
- 1 September 1939 - Second World War starts, Nazi Germany invades Poland
- June 1945 - Soviet-controlled government is formed on the territory
of the liberated Poland
- 1952 - In the new constitution Poland is officially called "The People's Republic of Poland" (PRL)
- 13 December 1981 - Army declares martial law as a measure to fight the growing anti-Soviet opposition
- 22 July 1983 - The martial law is lifted
- June 1989 - After the wave of strikes, the government decides allows the anti-Soviet opposition to partially participate in the election. The opposition takes 99% of the available seats and in the effect, a first non-communist government is formed, the country is renamed to "Republic of Poland"
- 9 November 1989 The Berlin Wall falls, officially ending the Cold War
