That place in which to see a bit of tragedy (7)
I believe the answer is:
theatre
'that place in which to see a bit of tragedy' is the definition.
'theatre' can be an answer for 'that place' (I have seen 'Place of entertainment ' mean 'theatre' so perhaps 'place' could also mean 'theatre'). I'm unsure of the remainder of the definition.
'that place in which to see a bit of tragedy' is the wordplay.
'that place' becomes 'there' (I've seen this before**).
'in which to see' is an insertion indicator.
'bit of' indicates taking the first letters.
The initial letter of 'tragedy' is 't'.
'a'+'t'='at'
'there' placed around 'at' is 'THEATRE'.
(Other definitions for theatre that I've seen before include "Surgeon can be seen here" , "Drama in general" , "Playhouse - operations room" , "Criterion in London, say" , "Space for 11 across art" .)