Setting is used to illuminate gendered experience in "Araby" in that the bazaar becomes inextricably linked to the sensuality of Mangan's sister.
It's important to understand what a "gendered experience" really is. An article by Laraine Wallowitz in The English Journal maintains that
Reading a text from a feminist perspective changes [student's] understanding of its meaning ... literature and media both reflect and create images of femininity and masculinity, and ... readers project their own assumptions about gender onto a text.
How, then, does the setting of "Araby" influence perceptions of masculinity and/or femininity?
The setting of the story is Dublin, which is described using deflating imagery. The city is "blind" and "quiet." The narrator's own house was formerly occupied by a priest who died. It is winter, and darkness falls before dinner is even served. There is a bleakness in this setting that creates a somber mood.
This sense of melancholy is shattered by the emergence of something seeming fantastical: a bazaar called Araby. The narrator associates a sense of magical possibility with this bazaar because he links it with Mangan's older sister, whom he is infatuated with. The narrator sexualizes her, noting the way "her dress sw[ings] as she move[s] her body" and the way the light defines the shape of her curves.
When the older girl finally speaks to the narrator, a moment he has fantasized about with great anticipation, she asks whether he is going to Araby. As she tells him that she cannot go, the narrator notices her subtle actions of feminine behavior, including the way she twists a silver bracelet around her wrist. In this moment, the narrator catches sight of her petticoat and notes the "white curve of her neck."
The fantastical setting of Araby has a name with syllables that "cast an Eastern enchantment" over him. This enchantment with Araby merges with his masculine desire to somehow win the affections of this older girl, and his drab life in Dublin is merely "child's play" by comparison. The narrator's sense of masculinity is thus heightened because of the mysterious and fascinating setting of Araby.