“How should I go about adding background information about characters, setting, and whatnot, while making it seamless and natural to the storyline, and engaging for the reader?”
I would advise not to go too crazy in the beginning. In other words, it may be best to keep the backstory to a minimum in the first couple of chapters. Offer as little backstory as necessary, just enough to provide context, but not enough to make it a slog to get through.
Reading an entire novel requires a huge time commitment and a lot of effort, and there are a ton of other forms of entertainment competing for the reader’s precious time. What a lot of readers do is read the first couple of chapters and see if the book is heading in a direction that will entice them to continue reading. If not, they abandon it and pick up something else. So more than any other time, the opening must be awesome, and backstories are generally not awesome, so save it for later, if at all.
In my book Prodigy, I have an intro, which I was not a fan of, but I just found it to be the best way. I basically set up the entire context of the story in one go. This is the point of an intro so I don’t think the reader minds as much. It’s when you begin your story, introduce your character, and then ‘info dump’ by stating everything about her.
An example of bad background info would be, “Amy sat quietly in class, listening to her teacher drone on. She was reserved ever since the accident last summer, where her and her friends went camping and accidentally killed a guy…” this may be okay, but not in chapter 1.
I consider it bad because upon first mention of Amy, it’s ‘dumping’ the backstory onto the reader. Your reader doesn’t care about Amy yet and at this point has nothing invested in her, so why would they care about her backstory? If you were to ask me, I’d say have Amy do something interesting, make the reader care about her, and then fill them in on some other details piece by piece – definitely not all at once, and definitely not in the first chapter.
You may also do a prologue. In the Art of the Hustle for instance, I have a prologue of the main character when he is rich. He’s being interviewed on some talk show and the interviewer asks him, “How did you become a billionaire, where did it all start?” And then I open with chapter one as this young broke kid finishing high school. I think this was way more compelling because the reader knows he eventually becomes rich, but doesn’t know how. As the story unfolds, the reader is trying to guess how he becomes rich.
As the story progresses, I try to use dialogue as much as possible to introduce backstory. This seems natural since characters meeting for the first time don’t know much, if anything, about each other. So naturally they would ask questions that would reveal their backstory. Even then, I wouldn’t get too crazy with it. I may do a bit and then back off out of fear that the reader would get bored.
So let’s say you are writing Batman and you open with an epic fight scene (usually a good way to hook the reader). Then you could have Bruce back at the bat cave, looking at a photograph of his dead parents and Alfred come in and say something like, “Today’s the twentieth anniversary of your parents’ death,. You would have made them proud, Bruce…”
In this example, we’ve seamlessly worked it into a piece of dialogue that naturally fits the scene. It seems organic and not shoehorned in.
So to reiterate, my preference is to provide background information sparingly, work it into the story as seamlessly as possible (e.g. through dialogue), and try to avoid ‘info dumping’ at the beginning of the book.
I hope this helps. If you have any other questions, let me know.