On my last how-to writing post, I talked about using your characters' backstories in a book. Now I'll address a related topic, how to incorporate your world-building into a novel. I won't get into how to do the world building because that's its own topic that probably could fill dozens of posts. But once you've done that work, how do you fit it into a story without writing an encyclopedia entry and boring your readers to death?
As with the character backstory, you as the writer need to know far more about your world than your readers do. You need to know enough to know how it will affect events and affect your characters, but your readers will be able to infer a lot about the world from the way it affects events and the characters.
I think one of the most important things to keep in mind when depicting the world of your story, whether it's in a fantasy world, another planet in the distant future or some aspect of the "real" world, is point of view. Each person sees the world in a different way, and your viewpoint characters will only notice or remark upon the parts of the world that are relevant to them. If a soldier enters a town, he may look for possible ambush locations, defensive positions, and how well-armed the people are. An architect or builder would pay more attention to the buildings and building materials. You get the idea. Characters will also notice the things that affect them. Something they may not have noticed otherwise will become important when it jumps out at them, gets in their way, helps them or forces them to change plans.
And that brings up another point -- the way to demonstrate what a world is like is to show your characters interacting with it. Don't tell us what foods are eaten in the world. Show them eating a meal or buying food. Don't tell us about the legal system. Show what happens when a character breaks a law or changes his behavior based on a law (and if a law doesn't affect characters' behavior, it doesn't much matter to the story). Don't tell us about the economic system. Show the character trying to earn money. In general, if it doesn't affect the characters, increase the conflict or affect the plot, it's probably not important enough to tell about.
A special case is dealing with what might be called paranormal elements -- anything that works in a different way from what's expected in the "real" world. That includes magic or advanced technology. You need to know the rules for how these things work in order to keep things consistent. But you don't need to spell them out for the reader. Readers will figure out how things work based on the way the story goes. I also recommend developing your rules before you start plotting. That way, you'll be forced to abide by them and be limited by them instead of being tempted to use the magic or technology to help your characters have an easy way out of trouble.
A good rule of thumb is to let readers know just what they need to know to understand the story, and just when they need to know it. Don't give in to the temptation to explain the entire world and its history in the opening chapters. Drop in the telling details that show how this world may be different from what the reader knows, and let those details be intriguing enough to make the reader keep turning pages.
I was recently re-reading a popular fantasy novel from the 1970s and a good portion of the second chapter was two characters relating the entire history of this world in a very "as you know, Bob" conversation where both of them knew it and they were quizzing each other. That wouldn't fly in today's market, where there's more competition for attention and where attention spans are shorter.
Finally, keep in mind what my parageography (yes, it was a real class) professor liked to say -- your world is a place where things can happen. It's not the story, no matter how weird, different, creative and magical it is. Keep your focus on the things that are happening in this world.