Setting comprises time, place, and physical environment of the locale or locales of where the action of a story occurs. There may be more than one setting in a short story or novel, although multiple settings are much more prevalent in novels than in short stories simply because of the structure and length of short stories. Stevenson often approaches fixing the details of setting in the reader's mind through indirect description, although sometimes he does provide direct description.
Starting with an instance of the direct approach first, Stevenson tells the time period of the setting directly in the first paragraph that the narrator, Jim, utters: "I take up my pen in the year of grace 17__ ...." There are instances of direct statements about the rest of the settings as they change from his home area to Bristol to the ship to the island to the stockade and so on, but most setting description is picked up indirectly through what the narrator says about actions, events and people.
One instance of the indirect approach to fixing the setting in the reader's mind is in the last half of the sentence quoted above. From it, we learn where during 17__ Jim was during the first part of the narrative: "back to the time when my father kept the Admiral Benbow Inn." We know that the action starts at the Admirable Benbow Inn and that his father is there with him.
Stevenson then indirectly describes the Inn in its locale through Jim's narration of what they learned from their seafaring guest: "he had inquired what inns there were along the coast, and hearing ours well spoken of, I suppose, and described as lonely ...." From this, we learn indirectly that the Inn is on the coast and in a lonely, remote area. We later learn indirectly something about the interior of the Inn: "there was a tremendous explosion of oaths and other noises--the chair and table went over in a lump." The Inn has a table and chair, but our minds populate the whole Inn with similar tables and chairs. We also learn about the sign for the Inn when we are told that there is a "notch on the lower side of the frame [of the sign] to this day."
These sorts of direct and indirect descriptions of setting occur in all the various settings. A couple of these later ones are:
to the southwest of us we saw two low hills, about a couple of miles apart, and rising behind one of them a third and higher hill, ....
among the shoreside trees, and I had caught a branch and swung myself out, and plunged into the nearest thicket, ....