Factory setting is nothing but getting your device to its initial, factory setting. In factory setting all the data of your phone get deleted. You can do this with your Lumia by two methods. One is by going through the main menu option. From main menu if you scroll down then you will get the settings option from where you can restore. Another method for restoring your device is that just press the power, volume and camera button together till you not get the vibration, once you get the vibration just release the power, volume and camera button simultaneously. Your phone will be reset.