Note story with universal setting (6)
I believe the answer is:
milieu
'setting' is the definition.
(thesaurus)
'note story with universal' is the wordplay.
'note' becomes 'mi' (as in 'do re mi'**).
'story' becomes 'lie' (I've seen this before).
'with' means one lot of letters go next to another.
'universal' becomes 'u'.
'mi'+'lie'+'u'='MILIEU'
(Other definitions for milieu that I've seen before include "Social environment or set of surroundings" , "Environmental condition, surrounding" , "Environment - setting" , "Surroundings - location" , "'Surroundings, setting (6)'" .)