class Widget extends Component {
    handleSettingsChange() {
        //need to let layout know of change
    }

    render() {
        <div>
            <SettingsPanel
                onSettingsChange={handleSettingsChange}
                initialSettings={this.props.settings}
            />
            <Layout
                data={ this.props.data}
            />
        </div>
    }
}

const settings = {
    hideImages: true,
    itemsPerPage: 5
}
<Widget settings={ settings } data={ data } />

constructor() {
    super()
    this.setState({ settings: this.props.settings });
}
handleSettingsChange(data) {
    //Assuming data is of the the form {changedProperty: value}
    this.setState({ settings: Object.assign({}, this.state.settings, data) });
}
render() {
    <div>
        <SettingsPanel
            onSettingsChange={handleSettingsChange}
            initialSettings={this.props.settings}
        />
        <Layout
            data={ this.props.data}
            settings={ this.state.settings }
        />
    </div>
}