The essay by Edwards is good, but I think his example of setting-centric story-now play is, um, a little odd. Perhaps extreme is closer to what I mean.
I've never played the sort of game he describes.
The closest I've come to running a game in which setting is the source of theme/premise, and is used in the way he talks about, is 4e D&D. But that game didn't involve the sort of Glorantha-style "embeddedness in place" that he refers to in part because the whole point of the 4e setting is to propel its violently capable protagonists into gonzo D&D-esque action.
The two games I've run that most closely resemble his approach to embeddedness in place have both been one-shots set in late Victorian England - Cthulhu Dark and Wuthering Heights - but in those games the setting wasn't really the point but more served as the backdrop for finding out what happens to the characters.
Personally, I use varying levels of pre-developed 'setting' in my story now games. My guideline is to have enough material for the choices made in character creation to be coherent. In Apocalypse World, much of that same sort of material is actually built right into the playbooks, which is cool. However, if I'm running my own setting, or my own game, I need to give the players some idea of the world they will inhabit, you simply can't play without that, and that means prep. I will draw a distinction here between campaign prep and session prep. I am indexing the former rather than the latter
This brings me to my second point, story-now is not, as some people believe, absent of any prep when prep is at least partially synonymous with 'setting'. It can be, but isn't always, nor does it need to be. Broadly speaking this can and is often accomplished by group world building in some form, but that isn't always the case.
One point where you will run into a lot of wrangling is in Step 1
@pemerton. That is to say, plenty of people have extensive discussions between players and GMs leading up to the development of characters, setting design/selection, probably even rules selection (or at least customization). This is not necessarily prefatory to a 'Story Now' or 'Zero Myth' kind of game.
Yet I have, MANY times here, been told that because there was such collaboration, and then usually ongoing collaboration at various points, on various elements and maybe even direction of the narrative, that "there is no meaningful difference."
Now, to me, and I am expecting to you as well, there IS a meaningful difference in that Story Now is a much more immediate and constant interplay between developing fiction and the process of playing the game on a minute-by-minute basis. A game where every week between sessions the GM asks a few of the players what sort of stuff they want to do, how did things go, maybe exchanges some ideas on material to use next, is one thing. A Dungeon World game in which players can and do, by dint of the mechanics, obligate the GM to bind himself to specific facts during play, is a rather different beast, and is the sort of thing really meant by Story Now.
I've put these two quotes together as they both deal with the same thing.
I think AW brings a genre - there are hardholds, and cars and bikes, and the bikies travel in gangs. There are lots of guns. And there's a psychic maelstrom, and as a result there are strange psychics and fortune-telling cult leaders and a little bit of weird tech.
It can be spelled out in those few sentences, and I've put them together by reading the playbooks. I could have looked at the discussion of Fronts and might get a bit more detail - there are mutants/grotesques, for instance - but I think there's nothing in that extra detail that one wouldn't be able to get to from what I've stated above. And there's nothing stopping a MC from pushing in slightly different directions that Vincent himself didn't think of!
Burning Wheel is fairly similar: there are Elves, Dwarves and Orcs - all very Tolkien-esque, and when you read the lifepaths there's little or nothing that would catch one by surprise - and then there are humans with lifepaths that drive home a strong mediaeval feel with a hint of sword-and-sorcery coming out of the Slavery & Servitude and Death Cult lifepaths. In other words, its classic FRPGing but whereas D&D leans into the gonzo BW leans into the serious.
If that's what is meant by developing a setting in advance of play, then there's no conflict with Story Now. You can do it the BW way - brainstorm together, get some ideas, build the PCs and then get going in that implied world (or, as I did in my first BW game, say "Hey, the GH map would work for all this" and so we start with that); or the AW way, of playing out the first session and building the initial relationships and then having the GM/MC go away and prepare a setting that makes sense of all that.
But if we're talking not just about a genre and a broad palette that signals the sorts of themes that might figure in play, and are talking something much more specific - there's this village here and they do things this way; there's this stronghold here and its overlord is a cultist of such-and-such a god; etc - then we've moved into the heart of Edwards's "setting dissection" essay. The most traditional models of this sort of setting - eg MERP, the well-known D&D settings, the 80s and onwards Traveller Imperium, etc - all tend to be at odds with "story now" play because they build in not only the premises of conflict but its resolution.
One striking feature of the real world as a site of play is not just that most people know at least a bit about it, but it notoriously doesn't supply its own answers!