Final answer:
The mood of the environment in a story is best described by the literary term 'atmosphere,' which reflects the emotional response evoked by the setting, distinct from the 'tone' which is the author's attitude.
Step-by-step explanation:
The mood of the environment in a story is best described by the literary term atmosphere. While setting refers to the time and place where a story occurs, the atmosphere encompasses the mood or feeling that the setting evokes in the reader. Unlike tone, which is the author's attitude revealed through their choice of words and style, atmosphere is about the reader's emotional response to the setting. For example, in "The Fall of the House of Usher" by Edgar Allan Poe, the dark, oppressive setting creates an eerie atmosphere that makes readers feel confinement and depression, reflecting the inner turmoil of the characters.