Okay mrsskinnyjeans,
Supposed you were asked to rewrite the story of the 3 Little Pigs changing the setting. Instead of the pigs building houses in the forest maybe there are in the future and building space stations on the Moon. When you are asked to change the setting, which is a major part of any story, you can create whatever you like because you are choosing the time and place where the story takes place. Just think about how important the setting is to a story, what if the Wizard of Oz took place in Silver Springs Maryland? what would that change about what characters were able to do or their reaction to things that happen in this new place?
You are just using your imagination to put a new twist on one of the stories you've read.
Hope this is helpful
L.S