One of the major mantras of writing fiction is "show, don't tell".
Is it ever okay to tell? When?
It's too easy to get blindly hung up on mantras. If you look at the great authors, they break the rules all the time. With that said, there isn't a predetermined time when it's okay to tell rather than show. You have to decide on the fly which method provides the clearest picture to the reader. Conveying a clear picture is an optimal goal.
The reason they say "show, don't tell" is so that you, as the writer, will work harder to convey the proper mental image to the reader. It's harder to show something in words than it is to just tell it. It is also more enjoyable for the reader to see it. Sometimes you can convey the best mental picture by simply telling however.
Example: you're describing something that the reader has never seen in the real world or even imagined. In that case you might have to spend five pages trying to show something that is quite simple and should really just be explained.
It has to be OK to 'tell' at some point, because everything comes back to the fact that you are telling a story. At the same time, fiction is powerful precisely because it creates a world and characters to whom the reader relates and uses those to help the reader see through another's eyes and imagine another's world. Telling the reader too much moves you closer to essay territory.
The specific instances of when to show something are far too varied to cover, but here are some general guidelines:
Background scene information that isn't helpful to setting up your mood, tone, theme, plot, and most especially characterization should be ignored or, if it cannot be ignored, told or shown very briefly. You don't want to go on and on describing a scene that isn't providing any movement to your plot or information for your characters. Be punchy.
Background details about your character can also sometimes be summarized. This must be done very careful. Things you want to stick with the reader or hit the reader most powerfully should be shown. Things that help move the story without being absolutely critical can be told.
In general novels will contain more information, more words, and therefore more telling than a short story or a short-short. Novels are designed to encompass more characters and more action, and so the compression of detail needed for a short story isn't so great.
For every guideline I have written, someone may come up with a counter example. In general you should not be looking for an excuse to tell. When you are inclined to tell, see if you could leave the detail out or paint it more concretely with your words. Still, at some point you have to tell the reader something! The general point is to prefer the concrete.
I wonder if a good addendum to the rule would be, "Don't show AND tell." There are times when you can tell, as people say, but you most definitely don't want to ruin your showing by telling.
"Kyle's fingers shook over the keyboard. Sweat stung his eyes but he didn't dare take his hands away long enough to wipe his brow. He was nervous."
Do you really need to be told he's nervous?
I'm going to go ahead and disagree, and I'll tell you why. The problem with telling, with clarity, is that you're no longer letting the reader's imagination do the work. Clarity is great for technical documentation, but a lot of highly regarded fiction is anything but clear. Hell, if you're a postmodernist, then clarity is your enemy. You fight it to the death.
To take a simple example, think about horror movies, and horror fiction. How scary is it when you actually see the monster clearly? It's usually a bit of a joke at that point. But that precious time when the monster is hidden? When all you catch is the fleeting glimpse, all you know of it is its sinister handiwork? That's magic. That's where all the scary comes from.
It's just like that with character description and character interaction. You need to have the reader filling in the blanks themselves to really engage them. They're going to do a much better job of pulling themselves into the story than you ever could, and you have to give them that space. Hell, even scenery description is better when it's vague(1).
Don't ever say, "Such and such is boring. Such and such is annoying. So and so is sad. So and so is happy. So and so is socially inept." It's quick, it's clear, it's boring. Those things are easy to show via dialog and description. Show them, and give the reader the space to empathize, and to color the scene with their imagination.
1) My favorite example is from The Colour out of Space by Lovecraft. Just a short story, so his space for description is pretty much nil. He sets the entire scene in the first 6 paragraphs, and never touches it again for the rest of the story. I can forgive him his favorite words (unknown, miasma, and infinite) for those 6 elegant paragraphs.
Another point you might want to consider is the voice of your narrator. Even if you are writing from third-person point-of-view, that narrator has a certain voice and a personality that your readers will pick up. Ask yourself if it would be suitable for the narrator, in that particular situation, to 'tell'.
Show. Be sensual. Carry the reader through the scene. Most of what we experience is sensory, even how other people are feeling. Sights, smells, time of day, noises. And show, like foggyone pointed out, how the environment reflects or portends or extends the characters' or stories trajectory.
Tell. Narrate. Explain. Detai... yawn
And... a rule is a matter of practice and training, but not necessarily of execution.
This is a mistake I've made in the past: "Show, don't tell" is actually a dictum of writing for the screen. Given that movies are a visual medium, it's generally a mistake to spend a lot of time with the characters (or a voiceover) telling you things that could be dramatized.
However, great books (and stories) can and do often "tell" us things that provide context for the action. Consider the famous beginning of Dickens' A Tale of Two Cities:
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
This is less common in modern writing, but the chief reason is probably that we've all been influenced so heavily by the movies.