We played near the farm.

Literal

We [topic-は] farm [attributive-の] nearby [at-で] played.

農場 ('farm') + の + 近く ('near, nearby,' a noun formed from the adverbial stem of the い-adjective 近い). で marks the location of the playing action. A simple past-tense narrative — the kind of thing a child might say reminiscing about a summer visit.