"Setting refers to the time and place of a speech act and, in general, to the physical circumstances" -  The living room in the grandparents' home might be a setting for a family story. Scene is the "psychological setting" or "cultural definition" of a setting, including characteristics such as range of formality and sense of play or seriousness.  The family story may be told at a reunion celebrating the grandparents' anniversary. At times, the family would be festive and playful; at other times, serious and commemorative.
The spirit of this component is for independent study, with schools and colleges submitting work on a range of texts and tasks. Schools and colleges are encouraged to check the appropriateness of texts and tasks with their non-exam assessment adviser, especially where there may be some uncertainty on the approach being taken, either by the school or college as a whole or by individual students.