What is the Setting of a Story and How Does it Help the Plot?

Setting of a story
A story without a setting is like eating four flavors of ice cream without being able to enjoy the essence of any. While the sequential events (plot) that unwrap as the story moves toward completion are incontrovertibly essential; it is factors like atmosphere, locale, time, et al that bear the very quintessence of the story.
"Description is hard. Remember that all description is an opinion about the world. Find a place to stand."
―Anne Enright
To put it simply, a setting of a story is what your name is to you; it lends you individuality. You will wonder how this acts as a rightful attribute in case of a story, it's very simple again. When you take up a book to read, more than the story, you connect with the character - an entity whose existence seems cogent and real because of the factors that his life is conjoined or influenced with. For example, the premise of Harry Potter is pivoted on Harry's quest to defeat Lord Voldemort, but it's the accompaniment of elements like the muggle world (Privet Drive residence), wizardry world (Hogwarts school), Horcruxes, magic, Quidditch matches, etc. that make Harry Potter series very believable. These factors help to mold the characters as well as support events in furtherance of the plot.

The whole idea of fiction is based on disbelief. It is thus important for the author to understand that the very fabric of a story is weaved from its settings and to intertwine the readers into your story, you need to build a world that elicits belief. Once you are able to do that, no matter if your setting is a grandiose kingdom situated in outer space or a story set during the Great Depression, your reader will believe in it.

Now that we know what a setting is - how it acts as a photographic backdrop to your plot and interacts with the characters, let us now understand the elements that make the setting.
Time
This is the starting point of your setting. You could choose Belle Époque for your period drama or it could be a love story blossoming in the hyperspace, you have all the latitude to develop your story and fuse characters with respect to your chosen time period. Likewise, your story could evolve from a specific time of the day like dawn, twilight, night, etc. or any specific time of the year - significant events like Christmas, Halloween, Easter, New Year's Eve, etc or birthday, death or wedding anniversary or stag party. If your story demands structural progression of events or of characters, then you must make sure that you keep track of time - for example, five years elapsed since her consciousness slipped into the unknown realm of pathology. This will lend more credibility to your storytelling, be it fiction or non-fiction.
Locale
A locale, in other words is the clothing of your story. This could be just about any place you have heard of, known of, visited, or a place that your creative mind contrives. It could range from country, city, town, train, prison, hospital, subway, manor, boat, desert, school, planet, rural region, etc. What follows your locale next is the architecture of the place - for example, if your protagonist is born in a Victorian style house then you will need to incorporate details like colored brickwork, bay windows, fireplace, iron railings, etc. as they will not just commingle with your character (as most of the important events are likely to unfold in his house) but will also help you connect with the overall plot of the story.
Atmosphere
This has got to do with the climatic influences in your story. This could mean the torrid rains, balmy wind, gentle zephyr, monstrous tsunami, swallowing earthquakes, clear skies, smothering avalanche, pristine mountain snow, etc. Enwrapping your story with weather details is a surefire way of enhancing the mood of your story. It won't be wrong to say that they make the mood of the story - every season, every motionless foliage, every bright beam that enters through the kitchen louver door comes in with a certain feel and rubs its symbolic significance off on the characters.
Geography
Geography of a place, again, helps to set the tone and mood of your story. It could be mushy lowlands, surreal forest, precipitous mountains, lifeless river, dead lake, a snow-crowned chalet in Switzerland, a generous resort in the Cable beach of Bahamas, as well as dwarf pines in France (flora) to the vitriolic rattlesnakes of Oklahoma (fauna), your description of the geography is an important element of the setting. Likewise, your geographic setting could also involve imagery of ports, plantation, dams, cemeteries, vineyards, etc. that will interact with your plot and characters.
Culture
Your cultural setting greatly redounds on your character. The social practices, religious beliefs, political scenario of a particular time, cultural trends, folklore, history, cuisine, clothing, music, etc. are some of the cultural factors that you can use to lead your characters through a convoluted plot or to give a direction to the characters to advance the story. The characters you create are affected by these cultural factors as well as act as their guiding factor throughout the story.
Senses
This is extremely vital as, it not just adds more belief to your story but, also helps to trigger memories of the reader. Imagine being wakened by the redolence of freshly-cut grass on a summer morning (smell); or sitting by the inglenook of a fireplace while the logs crepitate (sound); or enjoying a rich creamy ambrosial mouthfeel of Belgium chocolate (taste); or watching the undulating golden reflections of water on cave walls (sight); or moving one's fingers tenderly through someone's thick, knotted hair (touch); these sensory descriptions make sure they keep your readers curiosity piqued.
While you can add many layers to your story through the aforementioned setting elements, there are chances that as an author, you would fail to see the forest for its trees. In order words, you would be so caught up with the minutiae details of the settings that you will most likely lose the sight of the plot as a whole. Hence, you must know what colors are apt for your imagery, as overloading your canvas with too many colors will make you lose your sense of the subject (here, plot) and of your readers as well.
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