Sentence:  Then we relapsed into a discomfited silence, and wished we were anywhere else. But Miss Thorn relieved the <WSD>situation</WSD> by laughing aloud, and with such a hearty enjoyment that instead of getting angry and more mortified we began to laugh ourselves, and instantly felt better. 
Meaning of the word marked with <WSD> tags:  The combination of circumstances at a given moment; a state of affairs.