The settings of "The Outcasts of Poker Flat" have a decided affect upon the plot and characterization; in fact, it is the most important element of the short story.
1. Poker Flat is a town that is quickly loses its "virtue" and its money because of the presence of certain individuals. Therefore, a committee of the major losers is formed and
[T]here was a Sabbath lull in the air which, in a settlement unused to Sabbath influences, looked ominous.
This committee casts out the Duchess and Mother Shipton, a madam; Uncle Billy, a drunkard and a thief; and Mr. Oakhurst, a gambler. Ostracized, the party heads for Sandy Bar, a camp that has not yet "experienced the regenerating influences of Poker Flat." The outcasts take the difficult path to Poker Flat which is on an elevated territory whose climate is dry, but there is a cold, bracing air as they near the Sierras mountain range.
In this naturalistic story, the outcasts are subjected to the elements. After the Duchess decides that she will go no farther despite Oakhurst's warnings that in this "singularly wild and impressive" spot they may delay too much in crossing the mountain range. Consequently, after Uncle Billy steals the mules, the group becomes snowbound and the turn of events are directly connected to the setting of the unforgiving rugged terrain:
The wind lulled as if it feared to waken them. Feathery drifts of snow, shaken from the long pine boughs, flew like white-winged birds, and setlled about them as they slept. The moon through the rifted clouds looked down upon what had been the camp. But all human stain, all trace of earthly travail, was hidden beneath the spotless mantle mercifully flung from above.
With wry humor, Harte describes the indifferent nature "as if it feared to waken" the frozen women, the Duchess and Piney, while in the gulch the gambler Oakhurst lies dead of his self-inflicted bullet wound.