This is a physical description as it <em>fully depicts the place</em> that the character is passing by. For instance, he/she identifies meters ("about a hundred yards") and miles ("that was five miles wide".) He/she also describes the place: "a shallow lake," "full of rushes," "and ducks (...) in the season," "There was a slough or a creek leading out of it." This is a <em>setting</em> full <em>of physical details</em>.
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The author is suggesting do not trust in all the people because at that time, Spies gathered intelligence from letters, newspapers, and interviews with prisoners and deserters.
The author’s primary purpose in this paragraph is to narrate relevan historic facts.