There are many different settings that would be appropriate for a sci-fi setting. Science fiction differs from fantasy (although the two genres are known to overlap) in that it focuses more specifically on the future (even if it's only the very new future), scientific advancements (both those based on technology we currently have, and technology that has not yet been imagined). Your setting can include fantastic elements, such as alien-characters, flying cars, androids, etc. -- and your audience will accept them as long as you concentrate on verisimilitude. You'll need to believe in your setting, and describe it as exactly as possible, so that your audience will be able to imagine it as well. If you want to include elements based on current technology/real science, you'll need to do a bit of research in order to make your descriptions seem correct/real to your audience. Either way, be consistent, descriptive, and use a variety of sensory detail.
You don't have to include spaceships, or aliens -- but you do want to think about technology, and the way it shapes your characters' lives. A good example of this would be the movie Bladerunner.
Creating a world (also called "world-building) is the process where you lay out the details of your imaginary world:
- how the characters look, act, and speak.
- naming conventions.
- what characters believe.
- the appearance of the physical world, such as planets/star systems and structures (above ground, below ground, glass, steel, energy).
- whether alternative modes of transportation are used (i.e., spaceships or tauntauns--the snow lizards in Star Wars, frozen ice planet Hoth).
- what kind of technology and/or innate special powers are available or come natural to the characters.
Also, be sure to create the "rules of the game" and have the characters operate within those rules (i.e., if bi-locating is a power, describe it early on, not later).
Thinking through your world in detail creates a realistic world. The longer your work, the more details the better. In the end, just the best/most important details get used, but with forethought some minutiae may become an important part of the story. By mapping world details out ahead of time will prevent painting your character(s) into a corner, and adds some interesting layers of complexity to the story.
Science fiction is about how imagined science could affect the lives of people and societies, so it's open to the limits of imagination.
It all depends on what kind of sci fi work you wish to write. Some dystopian future novels actually regress in terms of technology such as The Search of Fierra and other Empyrion novels. In those novels its almost like science meets medieval times. You have people with medieval views of technology and treat the high tech like its magic.