Answer:
Setting.
Explanation:
The setting of a story is the place, the geographical location, or any description about how the scene or where the scene is taking place. It tells the readers where the scene is.
In the given passage from "The Twelve Dancing Princesses," the narrator reveals the princesses are "in a lovely little wood, where the leaves were spangled with drops of silver which shone in the brilliant light of the moon." This tells us the location of the princesses, the woods.
Thus, the correct answer is setting.
