Lady Susan is set in England, during the Regency period (1795-1835), which also happens to be the time during which Austen was writing. Austen wrote—but never published—Lady Susan towards the beginning of this historical era, from around 1793 to 1795. Both Lady Susan and Austen's later works are set during this time period, focusing on the intricacies of social class and the plight of women during a time of much political and social change. Comprehension of British social class hierarchies and customs during the Regency period is key to understanding many of the foundational themes and concerns in Austen's writing. Hers was a world governed by intricate social rules, particularly surrounding the finer points of courtship and marriage. Lady Susan, like Austen's other work, takes place within the fairly mundane space of the Churchill estate, along with certain apartments in the city of London. Both spaces serve as a backdrop against which the drama and politics of social life must play out, season after season, year after year.
Though it does not feature prominently as an aspect of setting in Lady Susan, it is important to note that British colonialism serves as a backdrop for much of Austen's work. During the Regency period, the British Empire was in the process of violently colonizing India, among other regions of the world. Though Austen generally only references colonialism in a roundabout way when referring to soldiers or men in the navy, this is nonetheless a component of British life that should be understood before analyzing Austen's work.