I am a newbie AI-cat herder but I have been having some fun with that AI site too, it is quite interesting what you can do with giving the AI "writing instructions" that it has to follow while writing. One thing I noticed the AI sometimes struggle with is that it loses track of WHERE characters are, you can be exploring a dungeon and fighting something then suddenly the AI is like "You cleave the zombie in half, sword slashes deep into the sandy beach as the waves push and pull in a endless motion" and just like that you are at the beach instead.
But if you instruct it to add the location to what it is writing when a character act or talk it will, generally, do a good job of adding it to the text and that way keep itself updated and reminded of where people are. Even to the point that you can have more than one "scene" happening at the same time in different places because it keeps reminding itself that character 1 is shopping in the city while character 2 is at the beach slaying zombies.
Another benefit is that when you have the above 'mostly working' it is easy to add additional rules to it for example that only characters that are in the same location can interact with each other to (mostly)stop characters from shaking hands from 3 rooms away and you can even tell the AI that it has to write how characters move between locations.
I really recommend people to try and think of "mechanics" that you want the AI to work with because odds are it CAN actually do it, if you can explain what you want it to do ofc which can sometimes feel like herding cats.
If the AI seems to be ignoring you I found adding something like "this must be respected and reflected in the writing." in/after whatever rule you are making gets the AI to notice/associate it with "the writing" so it actually does it.
Ah I figure I might as well share my current location instructions, keep in mind this could surely be simplified and made much better than this, currently trying to get the AI to consistently add it to text it generates from my own prompts but it works quite well with its own generation. If it starts writing the location tag in a weird way just edit the text and it goes back on track again.. and by writing it weirdly I mean if it puts "**Forest**" in the middle of the text when it is mentioning the forest, remove the ** and write "**Forest CharacterName**: " at the start of the text(if the scene is taking place in the forest ofc).