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What makes "The Masque of the Red Death" by Edgar Allan Poe such an important piece of American literature?

I don't know that :The Masque of the Red Death" stands as one of the most important pieces of American literature, but it is certainly one of Poe's most famous stories, and for good reason. In Poe's theory of short story writing, he held the idea that a story should be brief enough to be read in one sitting and that it should create one strong emotional reaction in the reader. Everything in the story, he proposed, should be directed to that end. "The Masque of the Red Death" lives up very well to his self-imposed standards.

From the opening paragraph until the closing one, Poe creates a sense of horror that grows ever stronger as the story progresses. Beginning with a vivid description of the Red Death, the "hideous" disease that had decimated Prince Prospero's country, the story ends with the horrible deaths of all in the "blood-bedewed halls" of Prospero's castle. Blood serves as the central motif throughout.

This final horror is heightened by the earlier appearance of the mysterious, sinister figure who had materialized suddenly to move among Prospero's guests:

The figure was tall and gaunt and shrouded from head to foot in the habiliments of the grave. The mask which concealed the visage was made so nearly to resemble the countenance of a stiffened corpse that the closest scrutiny must have had difficulty detecting [the difference] . . . . His vesture was dabbled in blood--and his broad brow, with all the features of the face, was besprinkled with the scarlet horror.

This gory figure, then, looks like the Red Death itself which will soon overtake all. The last line of the story underscores its carefully crafted eerie tone:

And Darkness and Decay and the Red Death held illimitable dominion over all.

Thus, "The Masque of the Red Death" is one of Poe's finest horror stories, an excellent piece of American gothic literature.

Finally, the story accomplishes more than creating Poe's desired single effect. Through his masterful employment of irony and symbolism, Poe develops provocative allegorical themes in regard to human nature and the inevitability of death.