Place and location impact a story by how characters interact with the setting and how it shapes their worldview.
Go deeper than just city, suburbs, or country when locating your character within a fictional world. Consider both place and location. Place is a broader term that defines a space or an area, while location is a more specific point where a specific town/neighborhood/building/etc. is physically located. So a place might be the mountains, while Emerald Lake is near Estes Park, Colorado is a location.
Place can also describe how a person lives within a space, such as an empty desert or isolated cabin. Defining place in this way can help you establish how it will impact the story and character. For example, living in seclusion limits interactions with people but may shift a worldview to one more peaceful and patient. Living in a bustling city may give a character energy and enthusiasm to achieve a dream.
Location can be used to create physical limitations and/or opportunities for a character as well. A character in search of an opportunity to share his art with others will have more opportunities in a city or town that values art and has a strong artist community. A character in search of a job outside of agriculture might face a great deal of frustration and disappointment in a small town that mainly relies on ranching for financial support if she is stuck there and can’t explore other locations.
Place and location should affect the story and characters differently depending on the situation. Consider how the same location of a small town with a close-knit community who has strong conservative values would have on a character coming home. A character coming home after a stint in prison for drug possession will be received and affected quite differently than a character who returns to announce an engagement and acceptance to law school.
Location also has an affect on a character’s thoughts and behaviors. Walking into a twentieth-floor office for a first day on the job may inspire anxiety and cause him to make mistakes while going out with friends for a fun night might inspire confidence and excitement.
Interactions with other people change in different types of location and choices may even be very different. Hanging out with people a character has known all his life makes him feel comfortable and let his guard down, maybe to the point of revealing something he wouldn’t or shouldn’t tell anyone else. Meeting someone on vacation could lead a person to inflate their status or lie about certain aspects of their self or life because they believe they will never see the person again.
Place and location almost act as another character in the way they can influence both characters and story. Carefully consider both to use them to their full potential.