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It is set in the fictional town of Blaine, Missouri. It chronicles the attempts of its talent-free residents to put on a show celebrating the burg's 150th anniversary. From the flamboyantly effeminate (but heterosexually married) director Corky St. Clair (Guest) to the Dairy Queen girl (Parker Posey), the cast and crew scream incompetence. Furthermore, St. Claire has invited Guffman -- a Broadway producer -- to see the production, with the hopes that they will eventually make it to the Great White Way. The movie is a loving parody of community theater.
A running joke of the film is the fact that Guest as St. Clair is an extremely effeminate man with stereotypically gay behaviours but who purports to have a wife (that nobody has ever met.) In a plot twist, he has to take over the role of the rugged male character in the play. This he performs wearing rouge and eyeliner.
The musical that is staged contains a series of grating and poorly performed songs such as "Nothing Ever Happens on Mars," "Everyone Needs a Stool" and a fan favourite "Swollen River" which was removed but put on the DVD.
The film's title refers to Samuel Beckett's Waiting for Godot. Note that reading a synopsis of Godot will provide a spoiler for the film.
See also: A Mighty Wind, Best in Show, This is Spinal Tap