Specifically, I am reasoning of The Rime of the Old Mariner, in which there is a third person narrator referring to the Old Mariner that is informing a story to somebody else. The entirety story is basically the Ancient Mariner"s but told in this fashion through a 3rd perkid.

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The literary work provided _______ ; a method of informing a story within a story



A story within a story can seem a bit simplistic yet hits the nail on the head. The Wikipedia page additionally refers to the phenomenon as a "nested story".

If you want to seem a little bit more scholastic, then the term I recommend is embedding.

The most widely-accepted use of the term "embedding" in the context of narrative concept is to designate the literary gadget of the "story within a story", the framework through which a character in the narrative text becomes the narrator of a 2nd narrative message, framed by the initially one

(Routledge Encyclopedia of Narrative Theory)

The exact same encyclopaedia also talks about "frame theory" which is worth a read.

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The mise-en-abyme is the literary term for a story within a story.

image within an image : story within a story Merriam-Webster



There"s also:structure narrativeorframework story

Frame narrative: A story in which another story is enclosed or installed as a ‘tale within the tale’, or which consists of numerous such tales. The Oxford Thesaurus of Literary Terms

Frame story/narrative

"We have currently introduced the general notion of enunciative level, loved one to the usage of straight speech in a message. Narrative levels are sindicate enunciative levels where the quoted speech is a narrative. A character in a story tells a story (about his previous, for instance, or a fictional story) and that story is situated at a narrative level which is second with respect to the major story.

What Genette calls intradiegetic story is a story within a story,

not only in the feeling that the initially frames it through a preamble and a conclusion . . . yet also in the sense that the narrator of the second narrative is already a character in the first one, and that the act of narrating which produces the second narrative is an occasion recounted in the initially one." (https://www.unizar.es/departamentos/filologia_inglesa/garciala/publicaciones/structuralnarratology/4.Narration/4.6.Embedding.html)

These are notes from the over connect, I hope they aid in answering the question.