Halliday (2007 : 277-8):
But “context of situation” is not just equivalent to setting. The context of situation is a theoretical construct for explaining how a text relates to the social processes within which it is located. It has three significant components: the underlying social activity, the persons or “voices” involved in that activity, and the particular functions accorded to the text within it. In informal terms, the situation consists in what’s going on, who is taking part, and where the language comes in.