Your original question had to be edited down so that it only asked one question, according to enotes regulations. I have chosen therefore to focus on the way the setting operates symbolically in this story. It is clear that this is a richly symbolic tale, and therefore the meaning is closely linked to Poe's use of symbolism.
Let us remember that there are seven rooms, each of a different colour. Seven is a key number that suggests the cycle of life and time passing. For example, we have seven days in a week, and then we have the seven stages of man. Let us also remember that the colour of the seventh room, black, is richly symbolic of death, and likewise we need to recall that it is in this seventh room that the clock (which again symbolises time passing) is housed. Of course, Prospero and his guests have locked themselves away in an attempt to stop the inevitable - to halt the ravages of time of live for eternity. The intruder, who could be said to symbolise death, shows that this is impossible. It is strongly symbolic that as Prospero follows the intruder through the other rooms to the seventh, he is, unknowingly, walking to his death, as he meets the intruder at the final stage of life and dies there.
In this tale, therefore, Poe uses the setting symbolically to convey his message of the impossibility of outwitting or running away from death - we are all subject to the passing of time and our own mortality, something that Prospero and his fellow revellers tried to ignore up until the last minute.