The phrasal verb to settle down has a couple of idiomatic meanings that are related but are used in specifically distinct situations. We'll practice the first meaning today, then we'll do the other one next time.
The first idiomatic meaning of to settle down is to stop moving or, specifically, stop any unnecessary movement or activity. Usually, an authority figure uses this phrase to make people sit still and listen. A teacher often says this in the classroom when students are being noisy or are too excited to listen. "Ok folks, let's settle down! Class is not over yet!" A mother or someone watching children also says this when the children need to be calm and quiet. "Hey! Could you settle down in the living room? I'm doing homework, and I can't concentrate."
We can also use this particular meaning with friends and colleagues, sometimes lightheartedly, when we need to focus and stop fooling around. "Ok guys, let's settle down. We need to get this work done in an hour."
Get the picture? Alright, let's practice.
A: We really need to settle down. We've been laughing for the past 30 minutes.
B: I know. We need to get serious and study for this exam. I could fail this class if I don't do well on this exam.
A: Ok, no more jokes. Let's look at Chapter 10. ... What's that noise?
B: It's the kids. They're playing video games upstairs; they're probably fighting again. ... Hey! Settle down up there! We're trying to study!
A: Should we go check on them?
B: They're fine. But if they don't settle down soon, I'm taking away their video games.
Alright folks, listen to your teacher, and settle down when you need to.
Enjoy your day.