According to a different source, this is the passage and the options that come with this question:
In the distant past, the Philippines was populated by a race of fairies who were unaffected by unpredictable weather. They minded neither sweltering heat nor freezing cold. They did not divide the day by hours of light and darkness. In fact, they lived in a constant dim twilight and never gave it any thought.
A. moderate temperatures
B. constant darkness
C. moderate sunlight
D. constant dusk
The setting of a story refers to the time and place in which the story takes place. In this case, we are told that the "race of fairies" in the story did not care about light or darkness, and that they lived in a "constant dim twilight." The best association we can make to this is that the fairies lived in constant dusk. Dusk refers to the darkest stage of twilight which occurs after sunset and just before night.