'Setting in' is clarifying the outline of whatever your subject is. Here it's lettering. We start with the bigger parts, particularly the straight edges.
You'll notice that I put a 10 degree (or thereabouts) angle to the walls around the letters, the 'wal'l between the background and the wood surface. This is a nice touch: the slight wall angle reflects a little light and lifts the lettering off the background more discernibly than you'd see with vertical walls. For this reason, raised letters are often much more readable in dim light than incised letters, which is why you frequently find them in churches and other dimly lit places.