Micah was an Ephraimite with a household shrine and an ephod (vestment).  One of his sons served as his priest.  In Moses' day, or Joshua's, these were sufficient grounds for everyone in the household to be stoned to death.  True, he was a very religious man, but so were the Canaanites. 

          

A Levite from Bethlehem passed by looking for work.  Possibly he left home because of the lack of observance of the laws of tithe and sacrifice, by which the Levites were supported.  Micah was overjoyed to hire a genuine priest for his household:  

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          "Now I know that the Lord will be good to me, since this Levite has become my priest" (Judg 17:13).

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           But he got it backwards.  He thought God was obligated to bless him since he had a real priest who could say the right words with the proper sacrifices.  This is sacramental religion gone to seed:  "I will get God to serve me through making the proper offerings and incantations."

         

At the same time, the tribe of Dan was still seeking a tribal homeland (Judg 18).  They were given land by Joshua (Josh 19:41-46), but were unable to dislodge the Amorites and Philistines (NIV Study Bible, p. 356 footnote).  Five Danites traveled through Ephraim and stayed at the home of Micah before passing on to spy out the town of Laish to the north.  Later, they returned to the main body of their kinsmen, and brought them up through Ephraim.  600 Danites stopped at the home of their former host, and played him false:  robbing him of the idols, the silver vestment, and the Levite.  The latter perhaps had no choice about going with the Danites, although Scripture says he went willingly -- it was a promotion for him:

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           "Isn't it better that you serve a tribe and clan in Israel as priest rather than just one man's household?"(Judg 18:19).
       
Micah gave chase and caught up with the Danites, but they threatened to kill him and his family (Judg 18:25).  Micah went home emptyhanded. The Danites continued on their way, attacked and destroyed the town of Laish, renamed it Dan, and settled there.  The priest, who is identified as Jonathan, grandson of Moses, set up the shrine and the idols, and served the tribe of Dan.

       

Such a dangerous time -- with wandering bands of violent men, preying on their own people as well as on "peaceful and unsuspecting" Canaanite inhabitants.  The central administration of the covenant people had broken down, militarily, politically, religiously.