A place name is a good start, but it's probably not an end when it comes to creating vivid scenes. Telling readers a character lives in Chicago's Loop doesn't capture the nature of the place and doesn't acknowledge how it changes. (The Loop is very different at eight in the morning on a weekday than it is at noon on a Sunday.) Also, setting “happens" constantly for your character. He's always interacting—in some way—with his surroundings and to ignore that is to strip away an important layer of reality.
That being said, some authors go easy on setting and focus only on describing the essentials. That's okay, as long as your reader feels grounded in the world you've created and the characters aren't simply “floating" through the story.
Dorothy Parker's short story “Here We Are" is light on setting and heavy on dialogue. She still establishes the setting—a train—where a newlywed couple has a tense conversation:
The young man in the new blue suit finished arranging the glistening luggage in the tight corners of the Pullman compartment. The train had leaped at curves and bounced along straightaways, rendering balance a praise-worth achievement and a sporadic one; and the young man had pushed and hoisted and tucked and shifted the bags with concentrated care.
As the story unfolds, Parker acknowledges setting just enough to keep the reader on the train with this couple:
He rose, balanced a moment, crossed over and sat down beside her.
Notice how this isn't simply a description of the train car. Instead, Parker combines action and setting to reveal something about the moment. The groom is moving closer to his bride; it is a moment of kindness.
In Raymond Carver's short story “Whoever Was Using This Bed," Jack and Iris are startled out of sleep by a phone call in the middle of the night—a wrong number. Jack returns to bed:
In the bedroom I find the lamp on and my wife, Iris, sitting against the headboard with her knees drawn up under the covers. She has a pillow behind her back, and she's more on my side than her own side. The covers are up around her shoulders. The blankets and the sheet have been pulled out from the foot of the bed. If we want to go back to sleep—I want to go back to sleep, anyway—we may have to start from scratch and do this bed over again.
Carver focuses on describing the bed and, in the process, shows how Jack is ready to just sink back in it and drift off to sleep after this disruption. The state of the bed, however, makes that possibility seem less likely.
When you use setting sparingly, make sure you're drawing the reader's attention to details that define the essence of the place. In Anton Chekhov's short story “A Trifle From Life," Belyaev waits in the drawing room for Olga, the woman with whom he's “dragging out a long, wearisome romance." Her eight-year-old son, Alyosha, is there as well:
Alyosha, taking hold of the tip of his left toe with his right hand and falling into the most unnatural attitude, turned over, jumped up, and peeped at Belyaev from behind the big fluffy lampshade.
Other careful details of this drawing room are scattered throughout the story: a lounge chair, a sofa with a satin cushion, a stuffed bird. Through these few well-chosen details, the reader gets a distinct sense of the setting.
