EastEnders - simple, innit? Goes out on the BBC four times a week (omnibus on Sundays); punch-ups, cups of tea, screaming rows, hearts of gold. Peroxide-blonde Pat Butcher and her big earrings. Red-faced hard nuts giving it all that. Not as fun as Corrie. Know what I mean?

But perhaps there's more to the programme than that. In a speech in 2002 to an audience of bishops and assorted clergy, John Yorke, the BBC's head of drama serials and a former executive producer of EastEnders, responded to tabloid accusations that the soap's relentlessly grim storylines were "undermining morality". Yes, he said, the characters did lie, cheat, steal, fight and screw people they shouldn't. Yet beneath all this were strongly moral themes - self-sacrifice, the triumph of good over evil - the kind of stories, indeed, that you find in the Bible. We need such stories, Yorke went on, "because they're true, and because they're universal".

Comparing a soap to religious worship may sound far-fetched, but there's no doubt that EastEnders, which celebrates its 25th anniversary on 19 February, has a significant hold on the public. On Christmas Day 1986, more than 30 million people watched "Dirty" Den Watts, the original landlord of the Queen Vic, surprise his wife Angie with a set of divorce papers. In the digital age, EastEnders remains one of the few mass television events. The current average audience is around ten million, but it can still rise as high as 23 million on special occasions. These figures don't account for the tabloid splashes and magazine covers that the drama provokes - an ecosystem sustained by these "universal" stories.

In fact, a story is never universal, not entirely at least. It is always played out in a specific context, in a specific setting. We might be drawn to EastEnders by its plot-lines, but what is it about Albert Square, the collection of replica house fronts and interiors at the BBC's Elstree studios, that convinces us to stay?

In the early 1980s, when the scriptwriter Tony Holland and the producer Julia Smith were asked by the BBC to come up with an idea for a prime-time series to rival ITV's Coronation Street, they both looked back to their childhoods in east London. Holland recalled the matriarchal extended family of his youth, names of his relatives providing inspiration for the soap's first great dynasty: the Beales. Foremost in their memories of the East End was "a feeling of community and a sense of territory, a look on people's faces that seemed to be saying: 'Hurt one of us, and you hurt us all.'" Here's how they pitched the series to the BBC:

The specific location is a fairly run-down Victorian Square, part council-owned, part privately owned, and the regular characters are the inhabitants of that square . . . "Trendies" may soon creep into the area but for now it is basically working class with strong "cockney" culture and values.

Strong values. Community. Territory. But was this based on a real memory of the East End, or was it just wishful thinking? That part of London has long had a grip on our imagi­nations: a poor but culturally rich area of the capital, intimately linked, through the docks, with Britain's rise and fall as an imperial power. A centre of immigration, its slums were still perceived as an "abyss" (as Jack London put it) well into the 20th century.

It's a favourite subject for memoirists, whose accounts show how the place has been marked by constant change, from the vanished world of Jewish Whitechapel recalled by Emanuel Litvinoff's Journey Through a Small Planet, to Bryan Magee's stories of his Hoxton childhood, and even Ed Husain's The Islamist. And it is a politicised place: the dockers' strike of 1889, Oswald Mosley's fascist marches and the socialist campaigns of George Lansbury all unfolded there.

But the vision of community laid out by EastEnders is decidedly fixed and apolitical. Characters come and go, their emotional lives are always on the brink, yet the one thing they can rely on is the Square. Social life will always revolve around the Queen Vic; their jobs will be local and have purpose - serving their neighbours in the caff, doing their hair, washing their clothes, selling them fruit and veg. Even the architecture recalls a Victorian ideal: a 20th-century tower block that overlooks the BBC lot in Elstree is occasionally scripted in to the programme as "the estate", a place where only villains and outcasts live.

Is it a coincidence that such ideas struck a chord with viewers in 1985? In the real world, Britain's economic decline had done much to destroy the country's sense of community, and the certainties of the postwar period were in collapse. The defeat of the miners' strike spelled the end of trade-union power, while in the summer of 1985 violence erupted in Britain's inner cities, as it had done in 1981.

The east London evoked by Holland and Smith drew heavily on the idea of Blitz spirit - strength in the face of adversity - often summoned up by older members of the cast. A landmark two-hander episode, broadcast in 1987, focused entirely on the Square's gossips, Dot and Ethel, reminiscing about the war.

Yet even by the 1980s, their world had largely disappeared. The original plans to film on location in Fassett Square, Hackney, were shelved when the show's creators went there on a research trip and discovered that the place had been gentrified. (Peering through the window of one house, Smith even spotted a woman weaving at a loom.)

As we drift further and further away from that era, EastEnders has become increasingly reliant on an array of caricatures, jostling for attention with the BBC's attempts to represent Britain's ethnic diversity. Its best-known characters draw their authenticity not from their East End roots, but from their precursors in popular culture. The Mitchell brothers, the shaven-headed wrong'uns who terrorised the Square for most of the 1990s, recalled any number of gangster types - something that the actor Ross Kemp (who played Grant Mitchell) has been able to exploit in his post-EastEnders career as a presenter of documentaries about gang culture, narrated in broad mockney. Peggy Mitchell, played by Barbara Windsor, is fond of proclaiming her roots. "I'm proper East End," she snarled in a recent episode - but do we find her believable because Windsor hails from Shoreditch, or because her face is recognisable from the Carry On films?

There's a dramatic device favoured by soaps, in which one character will reminisce about another's childhood. (Here's Pat to her stepdaughter, Janine, in a recent episode: "Do you know, when you were little, I used to watch you in bed. You looked so lovely then.") It often comes during a lull in an argument, perhaps because, as viewers, we're more susceptible to suggestion after an onslaught of on-screen emotion. Its aim is simple - it establishes a past for a fictional creation who didn't have one.

Albert Square operates in a similar way, mingling fantasy with history and implanting the memory of a cohesive, rooted and stable culture into our consciousness. EastEnders is, at heart, a place where nothing ever happens.

Daniel Trilling is deputy culture editor of the New Statesman.