Cat eats Mexican food over in that place (8)
I believe the answer is:
location
'that place' is the definition.
(I've seen this before)
'cat eats mexican food over' is the wordplay.
'cat' becomes 'lion' (lion is a kind of cat).
'eats' means one lot of letters goes inside another.
'mexican food' becomes 'taco' (type of Mexican snack).
'over' is a reversal indicator.
'taco' backwards is 'ocat'.
'lion' going around 'ocat' is 'LOCATION'.
'in' acts as a link.
(Other definitions for location that I've seen before include "Position, point in space" , "Setting" , "Position,place" , "Site of film production away from studio" , "Place, position" .)