When a reader thinks about the setting of a story, it typically refers to the time frame (date) that the story takes place during and the physical location of the story.
Old Yeller takes place in the late 1860's. That date puts the story taking place just after the American Civil War has ended. It's a tough time in history for Americans. While the war might be over and the Union restored, the country is forced to wrestle with all of the war's repercussions. Many men have been killed and many more wounded exist. The south still has bitter feelings against the north, and a president has just been assassinated.
The place that the story takes place in is Salt Lick, Texas. That is 600 miles south of Abilene, Kansas.