Setting: one of my favourite subjects :-)
Many people will say that the setting is the <i>entire viewshed</i>, which is a very, very important and probably the major part of a site's setting. Obviously sites like barrows on the slopes of a hill can not just be contained in a setting that consists of the viewshed, because there are parts of the hill that can't be seen from the barrow itself. These surrounding areas must be part of the setting too, even if they can't be seen.
I think the above kinda says that, in my opinion, a site's setting is the immediate vicinity, say 500m radius (maybe 1km to be safe), and the entire viewshed of the monument.