“If a writer of prose knows enough about what he is writing about he may omit things that he knows and the reader, if the writer is writing truly enough, will have a feeling of those things as strongly as though the writer had stated them. The dignity of movement of an iceberg is due to only one-eighth of it being above water. A writer who omits things because he does not know them only makes hollow places in his writing. A writer who appreciates the seriousness of writing so little that he is anxious to make people see he is formally educated, cultured, or well-bred, is merely a popinjay.” Ernest Hemingway
Everything that you don’t say in a story makes what you do say all the more powerful. For instance, the reader doesn't need to be told that Beth Anne is scared. The reader picks that up by her mannerisms, the way she’s breathing, what she says. It’s a cop-out and an insult to the reader to come right out and say, “Beth Anne was scared,” especially when the scene being built around her is already eerie and the reader is begging Beth Anne to turn around, don’t turn that doorknob, just go home.
A great story to read that showcases the iceberg theory in practice is The Lottery by Shirley Jackson. In the story, townspeople gather around for the annual lottery that takes place nation-wide. The lottery is an old, terrible tradition in which everyone draws numbers and the “winner” of the lottery gets stoned to death. The story raises a lot of questions about society and what people are willing to do to each other. It’s about the blurred lines of right and wrong when a people are raised to uphold tradition even though they are cruel, and how what is essentially a crime (murder in this case) can be rationalized and carried out without remorse. The characters in this story go on about their day as if they didn't just kill someone. Some of them are eager to get the lottery over with so that can continue with the household chores or the children can get back to their games. A lot of this is not told to the reader but is intuited. You get all the ideas of the characters and world by what they are doing and through their motivations. Never once does Jackson come out and say, “Society is a complex, sometimes ruthless system and we should be careful how we treat each other.” She doesn't need to. We get it.
Does this mean you can’t world build? Plan? Craft? Gather information? Create languages and culture? Absolutely not. All of the background is important. The more you know and express in well thought out prose, the more the reader can catch onto without having to be told. Do I, as a reader, know everything about Hogwarts or the wizarding world? Heaven’s no, and that’s because JK Rowling is a masterful storyteller and has left a treasure trough of information under the words she’s written. You have to have a great understanding for the subjects you are writing about to be able to do it justice. In order to write a story about someone who has lost a loved one you need to understand the grieving process and the relationship the characters had before the death. If you do this, what the characters say and how they act will convey to the reader the underlying issues and can prevent your story from being trite and campy with flat lifeless characters.