I tend to play in Forgotten Realms now-a-days as a world, but was thinking if others would consider a setting something smaller such as Sword Coast, Phandalin, Icewind Dale or another region. Could Waterdeep be a campaign setting? If I was getting players and they asked what setting and I said FR- Chult is that different that if I said FR- Dalelands.
Is a setting a world like Dark Sun, Greyhawk, or Mystara in that has its own flavor and niche rules or can it be something else?
As others have correctly observed, a setting (or a
campaign setting) is a term that is used both to describe the following two things:
A. The world, overall, in which a campaign takes place. This can be a published setting/ third party setting (such as Exandria, or Lankhmar, or Eberron, or Pelinore) or a completely homebrew setting, or some amalgamation of the two.
B. That part of the world with which the adventurers interact.
The reason that (B) can matter a great deal is that most worlds are not monoliths.
Take Forgotten Realms (please!).* If you're playing an FR campaign in Waterdeep, it's probably a great deal different than playing an FR campaign in Al-Qadim or Kara-Tur, especially if your FR campaign is going to stay in a geographically restricted area.
On the other hand, if you are playing a "water themed" adventure on the high seas, the differences between playing in Greyhawk and FR are probably going to be minimal compared to the fact that you are playing with a particular theme.
As such, when we talk about settings, we can be referring to both the world (A) or to the part with which the adventurers are interacting (B), but which part matters more or predominates will usually be context-specific.
*Apologies to Henny Youngman. For the 10 people who get that.