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The professor gave them a piece of advice."Remember," he said to them, "the four of you may be proficient, each in your own subject, but if you don't have the sense to act suitably to the time and circumstance of a situation, you may have to go hungry."

The sentences are taken from the story Too Much Knowledge Maketh Fools.

When I look up the meaning of the word "situation" in a dictionary, I find some definitions but I cannot decide which one should be chosen. I think it might be "a state of affairs".

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In this context it would mean the condition in which one finds oneself. Obviously, these conditions can be variable and have distinct difficulties associated with them, and it is these conditions I think that the professor is emphasizing.

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"The combination of circumstances at a given moment" will be the right choice in this case. It can be expressed in other words in different dictionaries, so I think your guess is correct.

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