To give the characters a suitable atmosphere/environment to act in. It prevents characters from looking "stationary" by allowing them to interact with their surroundings.
It also makes the reader aware of the environment the character is in and the description of the setting helps them imagine it. The reader can therefore think of the consequences of living in such a setting, and its effects on the character and how the character can influence their environment.
It helps give depth to a character by making them more life-like as they interact with their environment.
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