For this one, let’s take a page–pun intended, ha ha–from Edgar Allen Poe.
In his fiction, he demonstrated the effectiveness of imagery, atmosphere, and even the weather on a story’s impact. Poe focused on themes of despair, decay, rot, death, and madness. He did not confuse his readers, therefore, by tossing in a charming little cottage backdrop with bunnies cavorting amidst its flowers. Instead, he set his tales in crumbling palaces, isolated old houses, and prisons. These are the intrinsic settings for gloom and disaster. His characters prowl secret passages by night–not the happy sunshine of day. They lurk in underground crypts and break their hearts among coffins and tombs. No one in a Poe story is going to trill song. The ravens may gather like ominous omens silhouetted against a darkening sky, but bluebirds of happiness will not twitter. The lashing wind of a winter’s gale can batter a house. Within, there will be insufficient candlelight and no cheer burning merrily on the hearth.
Consider the tropes of your chosen genre. Think about the plot you’ve outlined. Plan the tone and mood of your story with as much attention as you’ve organized your plot events. Let setting contribute to that mood through active participation in those tropes, whatever they may be.
For example, let’s examine the mood and location of a romantic story. Both should enhance the tone you’re trying to evoke.
In the 1952 John Ford film, The Quiet Man, Sean sees Mary Kate for the very first time as she’s leading a flock of sheep across a verdant Irish pasture with the sun shining on her red hair. He’s instantly attracted by her beauty and wants to get acquainted. If I recall correctly, in the 1933 short story by Maurice Walsh that the film’s based on, the author depicts Sean in church, sitting behind Mary Kate and being struck by how the hair on the back of her neck swirls in delicate tendrils. One version works best for a movie while the other version takes advantage of viewpoint in prose. Both approaches are incredibly romantic. They convey the same plot event, and they are both using setting to enhance this man’s first attraction for the woman he’ll court and eventually marry.
On the other hand, if your story is a gritty thriller, using the lush natural beauty of Ireland as a backdrop and having your protagonist stop in the middle of dangerous action to notice a woman’s fiery hair will only make him appear stupid or super lousy at his job. Of course, he can notice her hair if he has her under surveillance and its bright color makes it easier for him to follow her. But in that situation, he’s going to focus on the hue rather than how a tendril curls on the back of her neck.
If you’re writing comedy, you can use a dungeon as contrast, but it will be a place your characters want to avoid or escape as soon as physically possible. The setting then becomes a locale for mishaps, pratfalls, exaggerated terror of axes and spears, or playing cat-and-mouse chases up and down dark staircases. The photo below comes from the 1948 comedy-horror film, Abbott and Costello Meet Frankenstein. As you can see, the two comics are trapped on a rickety staircase between Count Dracula and Frankenstein’s monster. The set’s image shows rot and decay, but the lighting is bright, and the staging is not scary.
Comedy, however, will not in a serious way depict a dark torture pit beneath a rotting castle with the viewpoint character suffering dramatic, grim, joint-breaking, moment-by-moment sessions on the medieval rack. Comedy will instead gloss over the nightmare suffering and focus on other story elements, much as the Pit of Despair is handled in the 1987 film, The Princess Bride.
Contrast the comedic use of underground chambers with a serious one as depicted in the 1955 thriller, Night of the Hunter, where two children are hiding in the cellar from the psychotic that’s murdered their mother. Here, the darkness and the earthy baskets of stored potatoes serve as inadequate concealment for these frightened children.
It’s always a matter of appropriately choosing the details on which to focus. How well you employ them to conjure up atmosphere that will support your plot rather than detract from it will determine how useful your setting can be.