Sometimes it's necessary to tell, especially with setting. The trick there is to be sure the telling doesn't sound like it's in the author's voice. Have it come from the character's voice and express a legitimate character need, not the author's need to tell.
Telling can be distancing (She took her shoes off and walked across the pebble beach to the ocean's waves.) Showing, on the other hand, is intimate and immediate (Foam from the crashing waves gobbled the pebbles of the beach, racing toward her, and threw its icy fingers over her bare toes.) Showing puts the reader right in there with the characters and lets him/her vicariously experience what's going on. This is certainly a desirable place to be for a reader, and as writers, we want to get our readers there frequently. The key to show, don't tell, is to dramatize the narrative, or "put it in scene."
Who doesn't remember this childhood scary tale line: "Slowly he came, step by step, inch by inch . . ." Jumping up and down and screams all around! How boring it would have been to start, instead, with "The monster came into the room to eat up the little children."
One of my favorite examples of showing is from a contemporary author of fun crime fiction (I'm inventing categories), Colin Cotterill. His opening paragraph of Anarchy and Old Dogs describes a blind man retrieving mail from the post office. Immediately below is my rendering of it that makes it more telling than showing (with profound apologies to Mr. Cotterill). Following that is his paragraph.
Mine: Dr. Buagaew was blind, but he managed to get around fine. At the post office he walked directly to the p.o. box section from memory and reached out to touch the wood boxes. He felt for the loop of wool that was wound around the door of his box to make it easy for him to find. When he found it, he ran his hand over it to find the keyhole, then fingered the key into it and opened the box. He reached in to find the thin envelope he was expecting. His co-conspirator had delivered, as promised.
Colin Cotteril's: The post office box was eighteen across, twelve down, and it had a loop of wool wound around the door so Dr. Buagaew wouldn't miss it. He traced the keyhole with his left hand and inserted the key with his right. From inside the wooden chamber came the scent of bygone correspondence: of brown paper parcels and glue, of old parchment and secrets. His hand fell upon a thin envelope. He knew it would be there and he knew what it contained because only one other person was aware of the post office box address.
What's so great about Cotteril's rendering of this paragraph is that he actually shows us that the doctor is blind, without using any clichés like tapping a white cane. Between the wool loop, tracing the keyhole, and the wonderful scents he notices, we know without being told.
What's your feeling about show don't tell? Is it something you do naturally, or do you work at it? Do you have examples of telling vs. showing? It's always great to add more ideas to the arsenal for that ever-greedy show don't tell monster.