Narrative exposition is the insertion of important background information within a story; for example, information about the setting, characters' backstories, prior plot events, historical context, etc. In a specifically literary context, exposition appears in the form of expository writing embedded within the narrative. Exposition is one of four rhetorical modes (also known as modes of discourse), along with description, argumentation, and narration, as elucidated by Alexander Bain and John Genung. Each of the rhetorical modes is present in a variety of forms, and each has its own purpose and conventions. There are several ways to accomplish exposition.
Indirect exposition, sometimes called incluing, is a technique of worldbuilding in which the reader is gradually exposed to background information about the world in which a story is set. The idea is to clue the readers in to the world the author is building without them being aware of it. This can be done in a number of ways: through dialogues, flashbacks, characters' thoughts, background details, in-universe media, or the narrator telling a backstory. Instead of saying "I am a woman", a first person narrator can say "I kept the papers inside my purse." The reader (in most English-speaking cultures) now knows the character is probably female.
Indirect exposition has always occurred in storytelling incidentally, but is first clearly identified, in the modern literary world, in the writing of Rudyard Kipling. In his stories set in India like The Jungle Book, Kipling was faced with the problem of Western readers not knowing the culture and environment of that land, so he gradually developed the technique of explaining through example. But this was relatively subtle, compared to Kiplings' science fiction stories, where he used the technique much more obviously and necessarily, to explain an entirely fantastic world unknown to any reader, in his Aerial Board of Control universe.
Kiplings' writing influenced other science fiction writers, most notably the "Dean of Science Fiction", Robert Heinlein, who became known for his advanced rhetorical and storytelling techniques, including indirect exposition.
The word incluing is attributed to fantasy and science fiction author Jo Walton. She defined it as "the process of scattering information seamlessly through the text, as opposed to stopping the story to impart the information." "Information dump" is the term given for overt exposition, which writers want to avoid. In an idiot lecture, characters tell each other information that needs to be explained for the purpose of the audience, but of which the characters in-universe would already be aware. Writers are advised to avoid writing dialogues beginning with "As you know..."
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