Answered

what does an author use to create tone or mood in a story?

the detail of main plot events.

or vocabulary and diction?

Answer :

Vocabulary and dictation- think about a horror movie; if the surroundings are totally fine and normal and it's only the actions that are scary, its not that scary. 
BUT if the surroundings are eerie and unsettling, then you're unsettled and scary. You feel?

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