Starting with only Ron’s definition of Situation and material from The Cheap and Cheesy Adventure Generator, Vincent does a great step-by-step explanation of creating situation.

Dynamic interaction between specific characters and small-scale setting elements; Situations are divided into scenes. A component of Exploration, considered to be the “central node” linking Character and Setting, and which changes according to System. See also Kicker, Bang, and Challenge.
from Ron Edwards’ Provisional Glossary

There’s the definition, and here’s what we’ve got to work with:

* Locations: The secret central shrine of a temple to forgotten gods. (Magical)
* Characters: A hermit priestess, practicing obscure deprivations. (Wilderness)
* Threats: An order of magician-monks who punish blasphemers. (Magical)
* Threats: Field-vipers, wild dogs, loose bulls, and a variety of spiders. (Countryside)

How do you take these things and make a situation out of them? I’ll walk you through it.

It’s well worth a read, and, unlike some of the stuff Vincent posts, it’s immediately useful for people who aren’t especially into rpg theory or game design. Check it out.