Small community with house, say, set back (7)
I believe the answer is:
village
'small community' is the definition.
(I've seen this before)
'with house say set back' is the wordplay.
'with' means one lot of letters go next to another.
'house' becomes 'villa' (villa is a kind of house).
'say' becomes 'eg' (both can mean 'for example').
'set back' is a reversal indicator.
'eg' written backwards gives 'ge'.
'villa' next to 'ge' is 'VILLAGE'.
(Other definitions for village that I've seen before include "Small residential area" , "Small community" , "Give all (anag)" , "Small group of dwellings" , "Large hamlet" .)