Final answer:
Historical context in literature includes the time, social, and cultural environment of both the story's setting and the author's own time, which provides deeper understanding of the narrative and its significance.
Step-by-step explanation:
The term historical context in literature refers to the social, cultural, and temporal environment in which a story takes place. This includes the time period of the story as well as the broader social conditions that were present during the time when the author wrote the work. The historical context is critical as it gives deeper insight into characters' behaviors, choices, and the story's themes. For instance, the setting in Salman Rushdie's 'Midnight's Children' is crucial as it ties the protagonist's life with the historical and political events of the nation. Similarly, Edgar Allan Poe's 'The Fall of the House of Usher' uses setting to reflect the psychological states of the characters, which is intricately linked with the mood of the story. Recognizing the role of setting in literature enhances our understanding of both the narrative and its cultural significance.