In this last episode before GenCon 2008, Ryan talks about a problem he's recently encountered in his own and other people's projects -- that we spend too much time on mechanics and not enough on situation. He talks about why we likely run into this problem, what "situation" is (opposed to mechanics or setting), and an exercise he did in order to get his head out of mechanics and into situation.
What you refer to as "situation" sounds to me like "published adventures" or, to go farther back, "dungeons". When D&D started out, dungeons were essential to establishing what D&D was about. Today, I see very few published adventures to supplement these experimental new games. There seems to be so much scorn for adventures, so much self-sufficiency among game masters, that adventures are forgotten as a vehicle for describing what the game is about. That includes my own game; adventures are next on the list.
I agree, to some extent, about what you're saying. But in my view, an adventure -- published or homebrew -- isn't a situation in a game, but an application of a situation the game's already set up. Take D&D -- the situation is "heroes kill monsters to become more badass," as basic a situation as you're going to get. Published adventures offer specific elements for an instance of that situation. To avoid this getting into a semantics thing, the reason I bring this up is to offer that the core game has to have the kernel of situation baked it, whether simply in the premise of the system or in the interworkings of the setting. If a published adventure is about some completely new situation, then it comes out of nowhere and likely doesn't hook into existing characters.
With, of course, the exception of the "generic" game system -- a toolkit that the users are expected to apply their own ingenuity on.
Just listened to the last two episodes. This one was great as it solidified a concept that's been in my head but I haven’t had words to pin it down. There has to be an answer to "what do the characters do?" in a game, and the answer to that is situation. I've run into many games that were less than gripping because they had a really rich story but no immediate way for the characters to interact with it, so the setting just became a backdrop, but it didn't give any help with answering the situation question. A great game that tackles situation, ripe with conflict is Exalted, which right out of the book gives you plenty of examples of the kinds of things you're exalts might to, heck they even have comic strips running through out the books of what the exalted do.
Before listening however, I always clumped that "what do you do" into the setting, which is really inaccurate. An evocative setting should help creating cool situations, but it doesn't necessarily do so. Putting the effort to figure out what the characters do is really an element of the game in it's own right. Thanks for articulating that and for the examples you gave.