The part of the play that describes what is happening on the stage is called ...

- Exposition.

Explanation:

Exposition is characterized as the 'element or device' of the play that primarily functions to describe the background or context of the play along with the description of the setting and introduction of the characters of the play. It primarily intends to prepare the audience for the upcoming content by making them familiar with the context in which the play took place and its characters, setting, and other vital elements of the plot which would assist them to have a better and comprehensive understanding of the play. Thus, 'exposition' is the answer.

Dialogue is what happens on stage.