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This is a common structural device in longer Gothic fiction. Gothic narrative has tendencies toward the digressive, particularly in its Radcliffean subform. The Gothic inset, or tale within the tale, often deals with a dead or missing relative of the heroine and relates in some way to the riddle of the heroine’s identity or paternity. In Gothic fiction, inset tales are often introduced to the narrative by way of manuscript discoveries, and are so cabalistic as to sometimes require deciphering. The most elaborate example of an inset tale as a Gothic structural device is probably Maturin’s Melmoth The Wanderer, where the various tales are arranged concentrically, and the Wanderer’s chronicle of despair is recited by narrators within narrators within narrators. The inset tale was also used to create a mood of mystery or exotic medievalism, as in "The Provencal Tale” in Chapter 44 of The Mysteries of Udolpho.
Courtesy of Wendy Fall, Marquette University

See also: Gothic literary techniques

Source:
Frank, Frederick. The First Gothics : A Critical Guide To The English Gothic Novel. New York: Garland Publishing, 1987. Print.