Next to plot and character, I think setting is the next most important decision a writer has to make. Setting is where the story takes place and it can be a character in itself. The setting creates the atmosphere of the book.
Think about the geographic location (state, country, city), the terrain (midtown Manhattan, Midwest fields, San Francisco bay), buildings (is the story set in the city or rural area), weather (is it excessively hot, cold, major storms), transportation, population, economic, ethnic traditions, and time of year (spring, summer, fall, winter). Once the setting is decided, as you progress through the story make sure you stay consistent with time and place.
Don’t resort to clichés – “Dark and stormy night.”
Provide sensory details. What does the place look like, smell like. What are the shapes, colors, and textures? Use descriptive terms. “It was a nice day,” is bland. Come up with phrasing that ignites the reader’s senses.
Link details of your setting with emotions your reader might feel. What makes your setting different? What details can you provide that makes this setting unique.
Louise Penny, Deborah Crombie, and Elizabeth George (along with may other authors) do a great job of placing readers into their setting.