The Past

                                            Past Simple                                          FORM 
Past events Past states
The past simple describes an event or a chain of events at a definite time in the past. It can be recent or a long time ago.
The past simple describes states extending over a period in the past
Past simple
                                             Past Progressive                                 FORM
1. Actions in progress at a specific time   2. Circumstances
The present progressive expresses an action in progress at a specific time in the past. The action began before the specific point in time and might also continue after that time.

Further uses of the past progressive in this context!
  Due to the fact that the past progressive expresses actions in progress at a specific time in the past, it is used in narrative to describe the circumstances of events - what was going on when something happened. It describes background information in stories and "sets the scene" for events which took place.
              Past progressive 1                   Events and circumstances

I saw you outside at seven
o'clock in the morning. What were you doing?

Poor Don. He was walking down the High Street when he saw that beautiful girl who was crossing the street. He bumped into a lamp post because he wasn't looking ahead but at her. He fell on the pavement, but she didn't even turn her head.
I was taking
my dog for a walk.

Past Simple
Past Progressive

What happened.
What was going on when it happened.
I found my passport when I was tidying up my room.
The tyre burst while I was driving on the motorway.
I didn't hear the phone because I was listening to music.
I took out my dog. He was barking.
I saw Stephen as I was walking down the road.

A JOKE                A  JOKE     
Past simple and progressive
Events and circumstances
Events and circumstances (a crime)
Events and circumstances - two jokes