The forest is a perfect setting for the encounter that Young Goodman Brown is to have. It is symbolic of the complexity of the path that each of us walk in life. Sometimes life is confusing, dark and scary and we don't know which way to go.
The path of goodness is not always easy to find, one can get lost very easily in the forest, the trees all look alike. You can be fooled into following the wrong road and wander off the path that will lead you to safety. This is all a metaphor for the choices one makes in life.
"In "Young Goodman Brown," Hawthorne presents sin as an inescapable part of human nature. The fact that Goodman Brown only has to make his journey into the evil forest once suggests that the spiritual quest is a ritual all humans must undergo at some point in their lives. Brown, however, proves himself incapable of accepting this part of the human condition and cannot move forward with his life as a result."
The only way that Brown can get back to his wife, Faith, symbolic for goodness and faith in God, is to make the right choices in the dark forest. Unfortunately, for Young Goodman Brown, he becomes disillusioned when he sees the face of evil, instead of making his faith stronger, it makes him more of a doubter who lives with feelings of gloom all his life. He doesn't even trust Faith, his wife.
Nathaniel Hawthorne's setting of the forest is appropriate for the story "Young Goodman Brown" because the forest is where all the "dark, black" events occur, thus where the devil (evil) presides. The setting provides the perfect backdrop for the main theme of Good vs Evil. In literature, it is universally known that the forest is where the devil resides.
In addition, Hawthorne's story is an allegory where "symbolic elements...represent various human characteristics and situations" such as the forest being the appropriate place where Goodman Brown challenges his "Faith." Unfortunately for Brown, his spiritual journey begins in the forest and also ends there. Upon returning home, Faith greets him with open arms, but Brown "looks sadly and sternly into her face and passes without greeting". His spiritual journey into the forest has changed him forever in that he realizes that all mankind possesses evil.
Also, Hawthorne uses this setting as a characteristic of the literary movement, Romanticism. In keeping with the characteristics of romanticism, "its writers emphasized the dignity and freedom of the individual; rebellion against restrictions, whether political, cultural, or social; the importance of emotion over intellect; and the need for a personal relationship with God and the natural world". All of which the setting in "Young Goodman Brown" provides by having Brown search his spirituality in the "natural world," that being the woods.