A narrative does not
happen in a vacuum. The characters have to be somewhere, at some place, in some
time. Where and when the action happens is called the setting.
The setting is a combination of place, historical time, and the
social/cultural background the author sets the story against. In drama, the
setting is the physical background and props used to stage the production.
The setting creates meaning by creating a general feeling for either a particular scene or the entire work. For instance, a story set in a swamp in Louisiana will have a different general feeling than the same story set on a black-topped parking lot in Fort Wayne, Indiana. The author also chooses a time to place the narrative in. The time carries meaning as well. Romantic works are often set in the eighteenth century which dredges up images of royalty, courtiers, and intrigue. Science Fiction is often set around dates that spur the imagination, for instance, in the 1950's most science fiction was set around the year 2000. The social and cultural background also affects and creates meaning. If Huckleberry Finn came from a wealthy family or from a Pakistani family, the meaning of the story would change.
The setting creates atmosphere which is the general mood and/or feeling created by any work of art. Atmosphere is often incorrectly used as a synonym for tone (the attitude of the author toward the reader, subject matter, or themselves) it is synonymous with mood. In fact critics often speak of a work evoking a certain mood.