Sentence:  ...he being naturally an underground animal by birth and breeding, the <WSD>situation</WSD> of Badger's house exactly suited him and made him feel at home; while the Rat, who slept every night in a bedroom the windows of which opened on a breezy river, naturally felt the atmosphere still and oppressive. 
Meaning of the word marked with <WSD> tags:  The way in which something is positioned vis-à-vis its surroundings.