let vs define

scope.scm

> (define (foo)
    (let ((xs '(1 2 3)))
      (define (f)
	(set! xs 0))
      (f)
      xs))

> (foo)
0

> (define (bar)
    (define (f)
      (set! xs 0))
    (define xs '(1 2 3))
    (f)
    xs)

> (bar)
0

> (define (baz)
    (define (f)
      (set! xs 0))
    (let ((xs '(1 2 3)))
      (f)
      xs))

> (baz)
set!: assignment disallowed;
 cannot set undefined
  variable: xs
  context...:
   stdin::13854: baz
   /Applications/Racket v6.0/collects/racket/private/misc.rkt:87:7