They say that our place in society sets limits on our possibilities in life. The same is true of those who people our fiction. If we posit a character, a Mexican male, for example, who immigrates to the United States, we need to be aware that it is less likely for such a character to commit crime or take drugs than it is for a citizen of the United States to do so. That might not seem intuitive, but it is the case according to at least one study. And if we set a scene in a low-income area rather than in a White or affluent neighborhood, we must recognize that differences exist. For example, chemical accidents occur more likely in low-income areas than in White or affluent areas. Perhaps that is not a surprise, but social context is important. Things happen because of our place within our culture and society. Good stories recognize this, exploit it, and explore it, trying to understand.
Time is also an important element of place in society. Set a story in the future and voilà, you have science fiction. Set it in the past, and you have historical fiction. Put it in the present and who knows what you might have? Contemporary fiction? The bottom line is that change influences our lives. All of us. And what is true of us, must be true of the characters we create.