This town of sturdy Victorian houses made of gray Lakeland stone has a stunning setting, nestled as it is in a natural bowl on the shores of Derwentwater and surrounded by green hills.
The green hills are a stunning part of the town. 
mnli hypothesis: The green hills are a stunning part of the town.  premise: This town of sturdy Victorian houses made of gray Lakeland stone has a stunning setting, nestled as it is in a natural bowl on the shores of Derwentwater and surrounded by green hills.