I realize that is one of the perils of writing tersely. I had a more detailed explanation but that caused its own problems. I found writing tersely and then explaining that I am not assuming that any of the steps are handled in any particular way results in better discussion.
Fair enough. I am highly likely to expect a certain PoV is likely in posts here

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Fiction is one of those terms that hobbyists use in many ways. You will have to clarify what you mean. However in terms of setting the initial pages outlines the different character types and their description paints a specific picture of the world the characters inhabit. The fact that it doesn't go into whether the character will be facing the Mad King of Redgate Keep versus The Evil High Priest of the Hellbridge Temple doesn't change that Baker has a very specific type of setting in mind when writing Dungeon World. This is further reinforced by the gamemaster advice given later. Dungeon World is not an RPG that lends itself to running every type of fantasy setting. But instead, focuses on a narrow range of settings that have a specific feel.
Well, I tend to be fairly specific in my use of these terms. I find imprecision often leads to false impressions. Particularly the idea that somehow narrative and trad games are "just doing the same thing", which they are most decidedly NOT. So I would use 'fiction' to mean what is described in-game, including any setting that might be prepped or not. Other stuff I'd generally call 'color', though I am aware that some of it can be pretty binding on the participants (IE no laser pistols in a Dungeon World game). I would call that 'more binding' stuff 'genre', and then there are things like 'tone' which is generally more attributable to the specific instance of play, though it is certainly also something that systems may aim for (IE light and nonserious ala 'Dying Earth', or hard like WH4K).
I agree that DW itself is probably aimed at a fairly limited range of play, but I think that is true only to the degree that something like D&D also is. That is, you can do quite a lot with it, but given the ease of hacking PbtAs there's not a lot of reason to call it 'Dungeon World' much past a certain point.
And keep in mind we are talking about Dungeon World specifically not the PbtA framework which powers other types of RPGs which deal with different settings and different genres.
Well, I used that as my example, yes, so I'm OK living with that.
Then a clarification is needed by what I am calling a setting. Again it is meant to be taken expansively not narrowly. A setting is the background of the campaign. Anything and everything that could impact how a player will roleplay a character.
I don't disagree necessarily with this, as I understand what you are getting at, but I think it is worth being more precise. That is, if you and I each run a DW game, the 'world' that arises out of that play will be different, maybe quite different, in lots of important respects. If I use 'setting' only to cover 'fiction which pertains to the world, its lore, etc.' and not to stuff like character classes and such, then we have a word to capture just that, since presumably we are using the same classes (give or take). And I can use other terms for that other stuff, depending on context, rules, or player options, etc.
The point of all roleplaying whether it is with a human referee as with tabletop RPGs, collaborative storytelling, refereed by a software algorithm, or adjudicated by the rules of a sport (LARPS), is to pretend to be a character having adventures. In order to have adventures there needs to be a place in which adventures can occur. In order for players to decide what to do as their characters there needs to be a context on which the player can make a decision. All of this forms the setting of the campaign.
Yet the whole sub-genre of Zero Myth games shows that NONE of that need be established previous to play, beyond what I call genre and player options. This distinction becomes important later on!
What I am calling a setting is not just a list of specific details like the Sorceror Supply Shop is on Regal Street just south of the Square of the Gods in City State. It also the more general assumptions and tropes from which those details are created from. The details of Harn are grounded in the fact that it is a medieval setting with some elements of fantasy and the fantastic.
The procedure that I outlined and claim covers all tabletop RPGs works just fine if the group decides to start the campaign with just general assumptions and tropes and paint in the details later as characters are created and the campaign is played. It also works just fine with campaign where the group is sitting with the entire Glorantha corpus sitting on shelves next to the table.
Thus I stand by my point that the first thing that happens when any type of tabletop RPG campaign is run, is that a setting is defined.
I'm certainly not here to argue about any of that, just to point out that there are profound differences between a game where the FICTION, who, what, and where of stuff is determined beforehand and establishes the boundaries and context in which the characters are able to act, and a game where this is not so.
Given what I said above, Dungeon World is an example of an RPG that starts out a campaign with a setting that is comprised of no details just assumptions and tropes.
In addition, since the first campaigns of the early 70s the process has always started with "Hey what would be fun to play?" Whether it was a decision by a single individual, the referee, throwing it out to the rest of the group. Or a group just brainstorming ideas until one is reached by consensus. Then the details are fleshed out. What Baker did with PtbA style RPGs is make this process explicit and an expected part of how PbtA style campaigns are run.
Well, there are many possibilities WRT how a game and its parameters could be established. I've seen a lot of games in my 40+ years of RPG play. Anywhere from a GM simply decreeing that a certain game will happen with 'thus and such' provisions, all the way to long discussions and negotiations covering all aspects of the game to be. And in all sorts of permutations of chronology, from everything hashed out beforehand to nothing agreed upon until after everyone sat down at the table with character sheets in hand (potentially leading to issues of course). There are also tournaments and organized play, etc. of course, though I think we can mostly consider those special cases.
Step 1 happened when the group decided on using Dungeon World.
To answer look at the steps I outlined and what I highlighted
- The referee describes a setting
- The players describe some character they want to play in the setting.
- The referee describes the circumstances in which the characters find themselves.
- The players describe what they do as their characters.
- The referee adjudicates what the players do as their characters and then loops back to #3.
You (and
@pemerton ) are assuming, likely based on my reputation, that all of what I highlighted are handled more or less the same way that Dungeons & Dragons and other similar RPGs campaigns are handled.
I deliberately elected not to expand on what one does to describe a setting, describe characters, describe circumstances, how player describe what they do, and how the referee adjudicate. All of these can be handled in different ways including delegating it to the consensus of the entire group. Dungeon World other PbtA RPgs represent a specific implementation of the above.
These steps I feel represent the minimum one has to do in order to run a tabletop role-playing campaign. A group wants to pretend to be characters having adventures using pen & paper this is what works. There are other broad alternatives but that means you doing something different like playing a board game, a CRPG, wargaming, LARPing, Collaborative Storytelling, and so on. Each of those are fun but have different consideration to make them work.
Yeah, I am simply pointing out that the most straightforward and common interpretation of the items on that list, worded as such, is going to involve an assumption that you are discussing trad D&D-esque RPG play.