What is the general setting of a story?

The setting is the environment in which the story takes place; the season, time, objects, and weather are all a part of this. If the plot of the story is about the American Civil War then there would be battlefields and such. There would not be tanks and B52s around because of the time period. There wouldn't be any deserts or rainforests around because it is in America.
It can function as a character, giving the other characters something to strive against or helping them out. It can also affect the mood and atmosphere of the plot.