How does the exotic setting in "And Of Clay Are We Created" affect the theme of the story?
Interesting use of the word "exotic" here. I associate exotic with an attractive, beautiful and strange, almost alien setting, but there is nothing of this in the setting that we are presented with in this story. After the massive mudslide, the narrator makes it clear that everything has been wiped out and buried under mud:
Much later, after soldiers and volunteers had arrived to rescue the living and try to assess the magnitude of the cataclysm, it was calculated that beneath the mud lay more than twenty thousand human beings and an indefinite number of animals putrefying in a viscous soup. Forests and rivers had also been swept away, and there was nothing to be seen but an immense desert of mire.
Note the absolute bleakness and barrenness of the setting. It is as if this part of the world had been reduced to the primeval state of "mire" that it originally started with. However, let us think how this proves to be a fitting setting for what happens. The main theme of the story, to my mind, is the inherent fragility of all humans. We are, after all, as the title reminds us, made of nothing more than clay. This is displayed through the symbolic "breaking" of Rolf Carle, when he is forced to admit his own pain and tragedy in his life through his brief relationship with Azucena. It is fitting therefore that such a revelation should occur in a setting where the power and strength of nature is so obviously self-evident, because it forces us to admit how "breakable" we are as humans and how we are unable to stand up against anything like the power of nature.