Which sentence would add to a reader’s understanding of a story’s setting? The events happen in a world where children are not allowed to play or laugh.
The events involve a young girl’s attempt to discover the truth about her parents’ past.
The events reveal that the main character is an especially sensitive and caring young man.
The events demonstrate that children learn how to deal with prejudice from their families.

The events happen in a world where children are not allowed to play or laugh.

Explanation:

Settings of the story concern the geographical place and time where the narrative takes place. We do not have to have an exact name, but any description of the place and period in which characters live describes the setting.

In the sentence above, we do not know the name of the world, but we know it’s characteristics. We know what are the rules of the world and can already imagine it being a scary, dark place.

The setting can be very helpful to the plot (for example, here might be freeing the children of that world) or for the reader to understand the traits of the character (maybe child character from this world is very serious and scared).