“A setting is the time and geographic location within a narrative, either non-fiction or fiction. The setting initiates the main backdrop and mood for a story. The setting can be referred to as story world or milieu to include a context beyond the immediate surroundings of the story.” (Wikipedia)
Settings can be as important as the game itself that you are playing. They can define the type of game you are playing, the expectations that the players have about the game and what sorts of elements will be encountered within the game. If your players are familiar with that setting, they may get more out of the game as they recognise some of the things they see, or have knowledge about a place, a legend, or the history of a thing encountered.
This isn’t always the case, and it can depend on your players, and the type of game. Personally, I feel the setting is most important to the GM, as you are the one putting the game together and both the setting and the game rules help you structure everything. It’s not always as important to your players.
Say I start a new D&D fantasy campaign, regardless of edition/version. I can choose to run my campaign in Greyhawk, Dragonlance, Forgotten Realms, Golarion, Glorantha (who says I have to play Runequest?), Middle-Earth, Westeros, the Discworld, or Foraldoorei. (The last doesn’t exist, I just made up a name.) I may impose race/character restrictions, or limited magic items, or whatever I choose to better suit that setting – but in this case the game edition sets the rules, and the fact that it’s D&D pretty much sets the tone/style of the game.
My current D&D campaign is set in Greyhawk. I’m quite certain that only one of my players really knows anything substantial about the Greyhawk world (and he knows FR too), a few may know some Dragonlance, Westoros and/or Discworld. Most of them don’t know Greyhawk and that doesn’t effect their enjoyment of the game. If there’s history/legend/detail that they need to know, they will either find it, or I’ll give it to them if they research, make a Knowledge roll, or ask people who would know.
Our Gamma World campaign is set in north-eastern America. This is only because I started with published adventures (Famine in Far-Go, Legion of Gold, Mutant Master) that happen in a specific location. I could have easily chosen Australia and started near Melbourne or Sydney – just changing names and drawing my own maps (or ignoring large scale maps entirely). When you are gaming in a post-apocalyptic wasteland, one devastated country is much like another.
I have ideas for a Call of Cthulhu campaign set in England in 1922. I’m much happier to run this set in the UK rather than America because I know the history and culture of the UK. I own good maps of the area – I’ve been there and seen it myself. I’ve never been to the USA; I don’t understand their politics, I know little of their history and it’s too big a country to know much about specific areas that are the main focus of published CoC adventures.
When a game is set in the real world (past, future or alternate reality), there is a much greater chance that all your players know something about that location they are in, especially if it’s their country, or another major country like America, Australia, Canada, China, the UK, etc. It can make it easier on the GM because you don’t have to tell the players as much about what’s happening – you can assume they already know most of it.
This whole post has come about because I’m looking at a new setting for Shadowrun. My group has gamed perhaps once in the last five months, and that likely won’t change for at least another month. I’ve spent a lot of time writing up single session games using a variety of RPG’s and settings. One is Shadowrun (3rd edition), set in Canberra, Australia based on the ‘Olympus has Fallen’ movies. I really like the 10 sample characters I have, and thought it would be fun to keep them for other one-session adventures. While I don’t think I’ll actually run a SR campaign, that hasn’t stopped me starting to build an Australian setting. If I have details on a few decades of alternate-history/future, notes on what has changed, and little things like an alternative to Lone Star, then I can easily run published material based in Melbourne or Sydney.
Published SR material on Australia seems to be very basic. I did find someone on Reddit who put together a heap of material for an Australian campaign, mostly based on a Mad-Max wasteland. I’m slowly working over his material (13 pages long) to make changes that suit my idea of future Oz. It’s not so desolate. Lake Eyre is a freshwater inland sea, with both the Simpson and Strezlecki deserts now fertile plains. ‘Alice’ is the new capital of the Northern Territory. The ACT is gone, Canberra is now on the border of Victoria and NSW. The only known people in Tassie are at research stations in the ruins of Devonport and at Port Arthur.
I’ve spent time on the weekend making a map of the Republic of Australia in 2050, and here’s basic timeline of what I’m working on:
2010 VITAS.
2011 UGE. Mana storms in central & eastern Australia. Tasmanian tigers reappear.
2021 Goblinization.
2022 Lake Eyre expands outwards and the Northern Territory becomes a ‘First Nations’ state. (After the Great Ghost Dance & Treaty of Denver in the Americas, things don’t get as nasty here.)
2023 Following earthquakes, more manastorms, and political negotiation, state borders are redrawn.
2026 Tasmania abandoned as the wilderness comes alive. Storms, buildings collapse, wildlife attacks.
2029 World-wide computer virus, Matrix Crash.
2030 The Republic of Australia formed.

Afterthought: If Covid-19 is anything like VITAS (Virally Induced Toxic Allergy Syndrome), do we get UGE (Unexplained Genetic Expression) next year?
[Following incubation, initial symptoms include fever, chills, and vomiting. If unchecked, VITAS progresses into anaphylactic shock, with an increase in histamine levels causing bronchospasms and vasodilation. Most deaths occur from bronchoconstriction, leading to suffocation.]