Then there can be the history of your setting (I indicate major magical wars have taken place in the Fairy Kingdom, leaving certain areas barren as nothing can stand having too much magic hit it. I've not gone into more detail than that on purpose. I think what I've said here conjures up the picture I want to convey. Having said that I would not rule out writing future stories based on this history where I can go into more detail).
I think it shows when a writer really knows their world/characters. They write about them with confidence and it is that which shows up as you read. I don't write out potted histories of my characters though I can understand why some writers do this, but I find out more about them as I write. I use basic traits to get me started and I build up my characters a layer or two at a time. This means I need to go back and rewrite (especiallly the start of a story) but I don't mind this as I will have to rewrite anyway. I tend to overwrite but think that's not a bad thing. It is easier to cut than to realise you need to make up more material in a hurry!
Then there's the history of how your realm came into being, the history of its government and so on. History can be used in so many ways to bring stories to life. I think outside of reading and writing this is why history is a great love of mine. It is full of stories!