From IFWiki

In a work of fiction, the whole environment (including the physical locations and cultures) in which the story takes place. In interactive fiction, the analogous element is particularly important to the experience of interacting and can be simulated very richly (as is seldom the case with characters). For this reason (Montfort 2003) in this volume has suggested it be called the IF world.

-- nm - 30 Jul 2002