The settings for the various scenes in the story need to be fully developed — the reader should envision the place where the tale is being told.  For example, if the scene is set in a wintry city where a woman awaits her lover, the reader should feel the icy cold of the winter, smell the flowers brought by the suitor, see the crowded street where young boys play, and have a sense of the neighborhood.  Were the houses wooden or brick, stucco or concrete, or where they all inter-mixed?  Were there trees in the park when the two lovers meet — a more vivid sense of the location adds depth to the story.

It is usually important to serially stage individual scenes, but care has to be taken to ensure that too much serial staging is avoided.  By this I mean the writer must balance clarity with tedium.  For example, one could describe a man’s passage from an upstairs hotel room to the lobby in the following serial manner (but you probably shouldn’t): 

            Peter stood up, and stretched.  Now was the time but he needed to move carefully to avoid anyone watching. He crossed the room, stopping at the door.  Turning the ornate handle sharply, he pulled the door open, and passed through into the hall.  He walked down the empty hallway and stopped at the elevators.  There, he pressed the down button, and waited for what seemed like an interminable time for the creaking elevator to arrive.  He entered, and felt the elevator sink slowly down to the first floor.  Exiting the confines of the ancient elevator, he strode across the lobby to where Elizabeth sat, waiting.

However, the above passage is much too filled with details which we don't need to know, but can allow our mind to fill in without words.  Little emotion actually comes through the descriptive words.  A better passage might be:

            Peter stood, feeling his muscles protest.  Elizabeth would already be waiting for him, he knew, but still he must go slowly to ensure no one watched.  The door to the hallway creaked slightly as he turned the ornate handle and pulled it an inch inward.  He paused, his ear to the thin crack, and listened carefully.  There was no sound.  Once in the hallway he moved silently down the soft carpet, turning his head to look behind him even as he walked forward, and wishing he could peer into each room that he passed.  But there was no one in the hall, and the rooms behind the doors he passed seemed still.  The elevator was empty too, and the lobby nearly deserted from the early hour.  He was uneasy, for anyone who wanted to spy on them could pick them out readily.  He forced a smile on his lips and walked to where Elizabeth waited, curled into one chair of a set of two recessed into small alcove off the lobby.

The above passage has detail, but the detail is intended to convey feeling (Peter's anxiety), and not just motion from one place to the next.

The language we use to set the scene is critical.  As John Gardner indicates in hisThe Art of Fiction: "A scene will not be vivid if the writer gives too few details to stir and guide the reader's imagination; neither will it be vivid if the language the writer uses is abstract instead of concrete. If the writer says 'creatures' instead of 'snakes,' if in an attempt to impress us with fancy talk he uses Latinate terms like 'hostile maneuvers' instead of sharp Anglo-Saxon words like 'thrash,' 'coil,' 'spit,' 'hiss,' and 'writhe,' if instead of the desert's sand and rocks he speaks of the snakes' 'inhospitable abode,' the reader will hardly know what picture to conjure up on his mental screen. These two faults, insufficient detail and abstraction where what is needed is concrete detail, are common -- in fact all but universal -- in amateur writing."

The following example shows how a sense of the place, time and characters can be given with minor changes:

The waiter took his order, then he explained, "One of the Panamanians..."

This could also be said as follows:

            A waiter had approached while he was speaking, and the General paused.  The waiter stood by our table, his look expectant, his pencil poised over the paper.  We both ordered, and the General held his silence until the waiter had departed from earshot.  Then he leaned forward, continuing:  "One of the Panamanians..."

The development of the setting should be designed to "show" the reader, rather than "tell" the reader.  For example, it's usually too simplistic to state "It was hot."  Rather, the writer should talk about the heat indirectly as it relates to the characters — the way clothes stick to a body, metal being too hot to touch, etc.  This conveys that it is hot, but in a more dramatic fashion.  The same is true for emotions — it’s best not to say "Jane is mad," but to let Jane's dialog and facial expressions (which you relate) convey the anger.  This is what is meant by showing rather than telling in writing, as illustrated in this example:

TELLING:       It was hot as I walked to the closest bar to get a cold drink.

SHOWING:     My shirt stuck to me, and the air felt thick in the mid-day heat as I searched for the nearest bar.  Any cool place, dark and feigning shade, would do as long as the beer was cold and plentiful.

In the first instance, the reader is merely informed that it is hot.  In the second example, the reader can conclude — form his/her own thoughts — on the sultry nature of the day.  "Showing" the reader evokes the setting with more reality than merely "telling."