Although we live in a less formal world these days and pretty much anything goes when it comes to setting your table for the holidays, I do believe it is always best to start with traditional entertaining etiquette, learn the proper way to do something and then change things from there. Once you understand the proper etiquette of how to set a formal place setting you can manipulate it to achieve your preferred style or feel for your table.
This place setting diagram for a formal dinner is a fantastic straight forward approach to learning the Formal and Informal versions for your next gathering.
MOST COMMON CHANGES TO FORMAL PLACE SETTING
I find the biggest change most hostesses make to the Formal dinner Placesetting is to reduce the number of glasses on the table. You may not enough glasses or perhaps your table space does not allow for three glasses per guest. In most situations one wine glass and a water glass will work just fine.
Next change is the removal of the bread and butter plate + knife, and for similar reasons as the glassware, quantity and lack of space.
THE FORMAL PLACE SETTING TRADITION YOU SHOULD BRING BACK
A tradition of the formal place setting that is often skipped, which will actually save the host both time and space in the long run, is placing the dessert fork and coffee spoon above the dinner plate. By setting these two pieces on the table right from the start you have saved a step in between courses. After dinner simply clear all flatware on the sides of the guests plate, slide the dessert course flatware down to each side and you are ready to serve your coffee + pie!
TOP REASON TO HAVE A DIAGRAM FOR A FORMAL PLACE SETTING
As I mentioned, our society is becoming less and less formal on a daily basis however, during the holidays I find it is nice to take a tip from the past and set the table with a slightly more formal touch.
My advice? Learn the rules first then bend them, do it well, with purpose + beauty and your guests will not question you. Or at the very least you will have the knowledge to respond correctly if they do!