A story shouldn’t take place anywhere but in a specific location. Even if a story takes place in an ordinary high school like “Edge of Seventeen,” that setting still plays a large role in the story because that same story cannot be told in a space station or tropical island. The setting must be unique to that particular story.
Being unique doesn’t mean exotic locations like Venice or Tokyo, but specific to the needs of the story. “Grease” takes place in a high school setting, but wouldn’t work on the Death Star in “Star Wars.” So the first goal is to pick a setting for your story and then give that setting unique characteristics of its own that can help or hinder the hero.
For example, the hero in “Grease” (Sandy) is a girl from another country, living in the world of the 1950s in a Southern California high school. In this setting, kids have cars and hang around drive-in theaters and restaurants.
Because of this setting of cars, the hero’s boyfriend races cars and beats a rival. This wouldn’t be possible if the story took place in a high school in Alaska or North Dakota in the middle of winter so the warm climate with lots of room for cars to race is crucial to the story.
Pick another movie like “Fargo,” which takes place in the cold climate of Minnesota. The cold weather with snow drifts helps defeat the villain when he tries to bury some money by the side of the road, but he doesn’t know if he’ll be able to find it again since the snowdrift makes everything look alike.
So when you create a story, consider your setting with care. Settings should never be interchangeable. If your story can take place on a tropical island just as well as it could in a futuristic space ship or on an 18th century pirate ship, your story probably isn’t fleshed out enough to take advantage of obstacles unique to that setting.