What was the 1st Buddhist Council about?

The account of the first and second councils is found in the Cūḷavagga of the Vinaya Pitaka (Cv XI and XII). The first council (Cv XI) was held in Rajagaha, at what is known as the monastery of the seven caves, on the mountains above the city. Five hundred bhikkhus were in attendance.

The idea for a council began with Mahakassapa relating to his fellow monks the story found in the Mahaparinibbana Sutta (DN 16) wherein Mahakassapa finds out about the Buddha's passing. He relates how he encouraged the monks to remember that everything we hold dear must pass, so they shouldn't mourn, and how an old monk named Subhadda said they shouldn't mourn because they were now free to ignore the Buddha's words and do what they wanted. He then requests that they rehearse the dhamma and vinaya together, "before what is not the dhamma shines and the dhamma is rejected; before what is not the vinaya shines and the vinaya is rejected; before those who speak what is not the dhamma become strong and those who speak the dhamma become weak; before those who speak what is not the vinaya become strong and those who speak the vinaya become weak."

At this, his fellow monks requested he select monks for the council, which he did - 499 of them, all arahants. The monks suggested he select ananda as the 500th, since he was a sekha, unable to give rise to such defilement as would lead to the states of loss and of course because he had heard much of the dhamma and vinaya in the Buddha's presence.

The elders asked themselves where they should meet, and agreed upon Rajagaha as being a great place to find the support they would need in terms of alms and dwellings. They proposed to stay there for the rains and hold the council there, and to agree that no other monk should stay in Rajagaha for the rains., Mahakassapa proposed it as a sanghakamma - any against should speak, those for it should stay silent - and it passed unanimously.

They spent the first month making repairs to their dwellings, then began the council.

The events of the council itself are, in brief, as follows:

1. Ananda, an arahant by this time, arrived just as the council was beginning.
2. Mahakassapa questioned Upali on the vinaya, beginning with "The first parajika, where was it laid down?". He asked about the story behind, the person behind, the issue behind, minor issues related to, what was an offence, and what was not, in relation to each of the precepts from each of the two codes of discipline and Upali responded.
3. Mahakassapa questioned Ananda on the dhamma, asking about the story behind and the person behind every sutta in the five nikayas, starting with the Brahmajala sutta and Ananda responded.
4. Ananda related the Buddha's permission to discard the minor and lesser precepts; they asked him if he had gotten specification on what were the minor and lesser rules and he admitted he had not. They couldn't agree, so in the end, Mahakassapa made a formal proposal that they keep the rules as they were, since it was known to lay people what was proper for them and what was not. If they were to change the rules, it would be spread about that they were going against the Buddha while his funeral pyre still smouldered. There was unanimous consent.
5. The elders questioned Ananda on several points where they felt he was deserving of rebuke, including that he didn't ask about the minor and lesser rules. He replied in defence, but accepted his actions as wrong doings out of faith in the elders.
6. The venerable Purana arrived and was told they had recited the dhamma and vinaya and that he should recite it with them. He replied by saying that while the dhamma and vinaya was well recited by them, he preferred to hold to the dhamma and vinaya as he had heard it from the Buddha himself.
7. Ananda related the Buddha's injunction that Channa was to receive the brahmadaṇḍa (God's or highest punishment) - that no one should speak or teach or advise him. They told him to tell Channa himself, and he asked what to do if Channa was harsh and abusive in response. They told him to bring many monks with him. The council seems to have ended there, as the text then follows Ananda to a meeting with King Udena and eventually Channa. Either that, or the council ender before this and Ananda related the injunction regarding Channa to the elders on a later date.