"The Monkey's Paw" is a horror story. How does the setting create a mysterious and frightening atmosphere?

In "The Monkey's Paw," written by W.W. Jacobs, the
author's description of the setting contains key elements necessary for creating a
setting that adds to the horror of the story.  In the first paragraph, Jacobs writes
that 

...the
night was cold and wet, but in the small parlor of Laburnam Villa the blinds were drawn
and the fire burned
brightly..."   

Immediately,
the reader is given a mental image of a dark, stormy night in which an intimate
gathering takes place in a secluded setting.  These details create a sense of distance
from safety, as well as being surrounded by an atmophere in which anything is possible,
particularly anything evil.  Had the setting been a Southern front porch on a warm
spring day, the element of horror would have been significantly more difficult to
convey.

The author's description of a room illuminated by
firelight also contributes to the notion of mystery and fright.  Shadows and darkness
are virtually synonymous with fear.  The power of the mind to create scenarios
and dreadful possibilities is what creates the power of horror stories.  Flickering,
unsteady firelight is perfect for a scary story.