Setting and location are fairly important to Othello, but the importance shifts according to what point of the play you're referring to. Early in the play, the fact that things are happening at night, in the street, are a marker of the fact that Othello's love for Desdemona is not and never can be a private affair. It is public.
Later, when they go to Cyprus, this isolates them from outsiders (mostly), and leaves them with a closed community, where discontent can fester. Since the storm destroys the fleet, it becomes very important. If Iago were off fighting, there would be little or no time to scheme about things. He could stab Othello, but not destroy his love.
Desdemona is isolated by coming with her husband, and made vulnerable; there would be no way for Othello (guided by Iago) to observe her, and so their love would not have unraveled.