The opening stage directions reference the way that the Loman house is surrounded by "towering angular shapes" all around it and this gives the impression of some kind of latent menace that threatens the Loman family. Willy himself makes numerous references to the way that when they bought the house so long ago, it was in the countryside, but as the city developed more and more people moved there, making it part of the city now:
The street is lined with cars. There's not a breath of fresh air in the neighbourhood. The grass don't grow any more, you can't raise a carrot in the back yard. They should've had a law against the department houses.
The setting serves at least two very important functions. Firstly, it highlights the way that Willy becomes more and more psychologically oppressed as he finds it harder and harder to ignore the failure of his life. Secondly, seeds are a very important symbol in the novel, and in numerous places Willy talks about his desire to grow something. This of course symbolises his desire to leave some kind of legacy after his death. His setting makes that impossible, both literally and symbolically. Not only do the buildings that surround his house mean that there is not enough light to grow, but also his job and his slavish adherence to the American Dream which has left him chasing illusions has meant that there will be no legacy.