When I was in eighth grade, I had one of the best history teachers. Unlike my all-time favorite history teacher who had in fact lived through most of the timeline his particular course covered (US History, he remembered when Christmas lights came into vogue), I learned an incredible writing lesson from this guy: setting makes the story.
He didn't use the word setting, of course, this being a history class, but he made the point several times. Why did certain societies flourish when parked on fertile ground? Well, they could grow enough to feed their people and didn't have to rely on trade for certain necessities. Why did some people fall to cannibalism? They lived on an island and after removing access to fertile fishing grounds, they had no one but themselves for sustenance. Who needs a navy if you are entirely landlocked, how do you feed 200,000 bodies in the dead of winter with no easy preservation methods for food storage, isn't it a bad idea to split up in a haunted house?
The story I tell in a ravaged apocalyptic city is quite different from the one I tell in an apocalyptic overgrown forest. In the city you are contending with other survivors, limited canned goods and medicine, feral children and animals, painful memories, and dangerously unstable structures. In the forest you are dealing with wild animals who no longer feel the need to allow their fear of you to stand in the way of a full belly, unfamiliar landscape, roving bandits, sudden drops in the ground and a lack of easy access and preserved food as well as a distinct lack of medical care.
Sometimes I use a certain setting because I am fascinated with the voice of the people who live there. The voice of a character who lives in a small town is quite different from one who lives in a city, is different from one who lives in a house, on the street, in an apartment, in the basement, under the bed. The setting guides the plot by boxing in my possibilities, especially given the cardinal rule of writing (and the only one I am unwilling to break) that I should never stretch the reader's ability to suspend disbelief beyond the breaking point. Between the voice and the plot, the setting builds the structure of my story in immutable ways. If you think of a story as an equation, the setting is not a variable like a character or a goal, but it is the rules of order in which you can perform the functions necessary to solve the equation. Remember, solve the bit in the parentheses, then multiply before addition and subtraction. Those invisible rules are the setting.
The invisible rules of my setting creates this logical plot flow for my character in my current short story: If she lives in the small town during winter, she must contend with isolation and a limited suspect pool, which most likely means someone she knows is the killer. What does that kind of knowledge do to my character? Ah, conflict!
Setting makes it possible.
Once you have the setting that makes your story's voice sing and your plot tie itself with nearly no effort on your part - ahaha, but this is writing. Once you have the setting and have mopped the blood from your forehead, examine the setting.
How much of your setting are you using?
Inception, a little flick you may have heard of (personal Inception watch count as of this post: 36), uses the setting to the point where the people are tension setters (projections who can become violent at a moment's notice) and settings within settings affect the plot and the how-the-hell-will-he-solve-that-puzzle-now rising tension. When Yusuf takes the van off the bridge, Arthur loses gravity and has to create his own drop to wake up his fellow mind-heisters exactly on time. Gray urban landscape filled with gunmen morphs into opulent amber hotel halls evolves into labyrinthine snow covered forest trails surrounding an ominous compound.
So...is your setting breaking a sweat yet? Work it, baby!