For the most part, Alice Sebold's The Lovely Bones is set in a suburban area near Philadelphia, Pennsylvania. This setting is important to the novel, since the location of the Salmon family's residence plays a key role in Susie's becoming a victim of Mr. Harvey. The suburban locale allows Harvey to watch Susie closely without becoming too obvious as a threat, as well as to prepare his underground chamber, which will become the site of Susie's death. There are many other details related to the importance of this being the primary setting for this novel.
Susie's Heaven also plays an intregal role in the plot of The Lovely Bones. The characters and settings she encounters there enable her to work her way toward acceptance of her fate, as well as development of the ability to let her family go.
There are several less significant examples of setting in this novel, such as the sinkhole, additional crime scenes, and the Inbetween. These settings are important, but do not play roles as critical to the development of the story as the first two mentioned.