The civil war didn't end with the death of the Emperor and Vader. It is still an ongoing conflict. Luke did go into "hiding" shortly after the battle at Endor. The Sith Inquisitors (as seen in Rebels) are still hunting Jedi.
The current theory is that John's character had crash landed a tie fighter on Tatooine during a battle above (on?) the planet (which honestly makes no sense as he's not wearing the correct gear). While wandering the desert, Daisy comes upon him while searching for scrap. She nurses him back to health and in turn he helps her out. One day they find a lightsaber and take it to Daisy's boss/master, Max von Sydow (a cyborg who is thought to be an undercover Inquisitor), to gather information on it. Some point after that they come across Han & Chewy (who have since gone their separate ways with the Republic) who recognize the lightsaber to be Luke's. The Imperials catch wind of Han & Chewy's emergence and begin to hunt them. With Daisy & John in tow, they flee Tatooine in search of information on how to find Luke.
Upon finding Luke they discover that he has gone crazy from the events that took place during the OT. When Luke sees that Daisy & John have the potential to become Jedi, his mind eases and he begins to prepare them for their training. He also tells them a story about the Inquisitors and how they came to be (cue Vader flashback). Eventually John's former commanding officer, Gwendoline Christie, discovers them and reveals that she has an connection to the force (although it's very much the dark side). Something something battle, Lupita Nyong’o, who is an active Inquisitor, shows up and joins in.
The final battle of the film takes place on an ice planet with a powerful Sith.