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'Setting' refers to the stage a story is told upon. This is usually defined as a location for the story, but it can also include feelings, events, and even central objects. Anything the story is grounded in.

'Setting' refers to what a work of creative writing is based on. This usually comes down to the location a story is told in, such as a small town, a forest, a single apartment, or the bowels of the earth.

However, setting can also refer to the central backdrops of a story beyond the location. Settings can be wars, magical forces, or devastating loss. It all depends on what stage the story is told upon.