Setting: Where and When the story takes place. The background, backdrop, and mood of the piece. In gaming terms it is often seen as all the stuff that players interact with.
Tone: In gaming, the players attitude toward the game. How the game makes them feel. What style of language do they use when interacting with the setting.
Mechanics: The rules of the game. generally focused around conflict resolution and interacting with the fiction in meaningful ways. This is not to be confused with(but can be part of) social etiquette and rules of behavior.
Fluff: The parts of the game book that are not tied to rules. generally this is setting material, in game fiction, and illustrations.
So I get into this argument a bit. The idea is simple, but I think that people are using a slightly different definition or definitions than I do. The idea is that setting is everything without the mechanics. In general I tend to agree with this statement, but I think that the fluff, to use the vernacular, is merely the Explicit setting, within the rules there is an implicit setting. Where a lot of games go wrong then to me is when the Implicit Setting is at odds with the Explicit Setting. Also certain things can be done with the Mechanics and fluff to affect the tone of play. Tone is a funny beast, because it is most effected by things outside of the book. This is, I think why it is often mentioned but rarely commented on in discussions about setting. If you have a poor GM or a bad day gaming, or one of those players, it will effect the tone of the game more than the rules, for the most part. I would like to point out Dread here as its mechanics are all about tone and tone is its primary set piece. Maschine Zeit and Marvel Heroic Roleplaying also focus more on tone and genre over setting.
When you get to alignment, it seems pretty straightforward. Just describe how you view the world. But it is far more than that. I have already discussed Alignment at some length so suffice it to say, Alignment is a big setting piece disguised as a mild mechanics piece. Also the choice of which god or gods you follow seems pretty small, but has huge ramifications. In D&D the gods are real. This is not some philosophical musing about ones place in the universe. The gods are real in a very visceral sense. Certain followers of the gods get special powers because of the choice to follow the gods, you can meet the gods if you can find them, and most importantly(in my mind) if you piss them off they can smite you. Being an atheist in D&D is madness. It is denying the earth is round, it is crazy like you read about in books. And the cleric and paladin are the right and left fists of god/gods. They have faith in their god the way a physicist has faith that gravity works. This is hidden within the rules for spell selection but this is crucial. In D&D there is very little doubt that the gods exist. They are real and have a measurable effect on the world around them.
Speaking of spell and class selection, when one looks at the mechanics of those it tells a very specific story about a very specific type of world. Magic exists in the D&D setting. Not only that, but magic exists in one very specific form. Magic in the D&D setting is Vancian, by and large. Vancian magic is named after Jack Vance, author of the Dying Earth series(among others). It involves the spell caster memorizing a set number of spells(based on level). When the spell caster casts said spell he instantly forgets it and must memorize it again in order to cast it. Now the ranger, paladin, and druid also have a couple other kinds of magic(wild shape and lay on hands in particular), but by and large magic in D&D is Vancian. This is for mechanical reasons, however it is a part of the D&D setting.
There are many other setting piece implicit within the rules of D&D. More than I care to list really. My goal in this article was simply to show what I mean when I tell someone that D&D has an implicit setting. I will continue this in a series of posts about various games and how their implicit and explicit settings are arranged. Mostly I am doing this as a thought exercise. So that I may better understand what I am saying, and games in general.