[1] Mood is established to affect the reader emotionally and psychologically and to provide a feeling for the narrative.
For example, the desert may be a setting for a cowboy story and may generate a mood of solitude, desolation, and struggle, among other possible associations.
Diction conveys a sensibility as well as portrays the content of a story in specific colors, thus affecting the way the reader feels about it.
The tone of a piece of literature is the speaker's or narrator's attitude towards the subject, rather than what the reader feels, as in mood.
[2] The mood is suggested by the elements utilized by the author, but relies on the subjective response from the reader.