The story is set at the turn of the twentieth century and begins and ends in London where Holmes and Watson normally live. For the most part, though, the narrative takes place in Sir Henry's ancestral home of Baskerville Hall in the bleak, lonely Devonshire moors and close to the grim Grimpen Mire. This time and place is perfect for fostering a sense of the supernatural which is such a powerful element of the story. In this time and place, old superstitious beliefs die hard, and the people who live in this lonely countryside are all too quick to believe in the existence of a fearsome spectral hound. These kind of surroundings are quite different from Holmes and Watson's more usual haunts in the heart of the huge, sprawling metropolis and centre of the modern world, London. This contrast lends a greater piquancy to the story. Watson admits he has to struggle not to give way to supernatural fears in this kind of unfamiliar and forbidding environment.
True, the hound is exposed at the end as being a flesh-and-blood creature rather than a supernatural entity, but the supernatural aura of the story is not entirely dispelled, for all that. It is worth remembering that Doyle did write the story based on an actual legend of a hell-hound in those parts. He certainly succeeded in creating a darkly rich and atmospheric setting for his story which more than anything has helped make this the most memorable of the Sherlock Holmes novels.
Setting= the time AND place in which a story takes place. The place in The Hound of the Baskervilles is the English countryside (the moors) and the time is the 19th century (1800's)
Most of the scenes in the novel took place in Devonshire, at the Baskerville Hall, the lonely moorlands, and the rundown Merripit House where the Stapletons lived.
The surrounding of the moor compliments the atmosphere of gloom and doom that went throughout the story. Besides being essential to the mood, the moor also lends itself to the plot, where Stapleton raised and hid his gigantic hound and where Stapleton, Selden, and Sir Charles Baskerville met their grotesque deaths.