The setting was the location and time period in which a work of literature took place.
The epic poem Beowulf was set in 6th century Denmark. (VOY: "Heroes and Demons") The setting for the holonovel Janeway Lambda One was ancient England. (VOY: "Cathexis")
In 2378, mulling over changing aspects of his holonovel Photons Be Free, The Doctor reasoned he could change the setting from the USS Vortex, which was closely but inaccurately based on USS Voyager. (VOY: "Author, Author")