Worldbuilding

Worldbuilding includes all the aspects of a fictional world. It is a term more commonly found in SF, while "setting" is more commonly used in non-SF. Both terms refer to creating the universe in which the characters of the work move about. However, in non-SF, the default assumption is that the characters move about in our universe, and share the reader's "setting", whatever it is. Historical novels, although defined as non-SF when not "alternate history", require aspects of worldbuilding, as does spy-fi and any other genre work that invents non-real events, places, or things. The further the setting of the work is from the presumed reader's experience and perspective, the more "worldbuilding" has to go into the work. "Worldbuilding" is primarily the act of creating a consistent universe in which the characters can exist. In SF, many things may be invented -- language, history, technology (including magic), location, types of beings, cultures, behaviors, levels of reality -- and all must fit within a consistent framework in order for the reader to suspend their disbelief.

See also breaking the fourth wall, in which characters within a work acknowledge their fictionality and/or the universe of the readers.