The setting of a campaign is everything that has to do with Place, Culture, and Time. Each of these factors are interdependant on each other and will define the parameters of your reality. They make up the baseline assumptions about what kind of world you will play in.

The Place. This can mean something as small as what kind of tavern you want to start in to what planet, what universe you wish to use. This can be entirely made up, selected from someone else's design, or a mixture of the two. So what if you use someoneelse's ideas. It is only plagerism if you try to present it as your own orignal idea. It is only copyright infringement if you try to make money off of your (stolen) design. There are no original ideas anymore. Everyone has been inspired by the imaginations of those around them. Sample what you like and add what you want! (it is polite to aknowlege the work of others, however)

The Culture you choose is the collection of people, institutions, history, and current events that make your world dynamic. It would be interesting to place your story on an abandoned planet with no inhabitants - just to see how the players survive. Cannibalism? Fun! However, the culture you do choose will make the campaign much more interesting and add to the flavor (no, not cannibalism...unless you want to. Cannibalistic Goblin Tribes are my favorite...)

The Time you choose will influence what levels of technology are available, what philosophies have developed, and what civilizations exist. This choice should probably be made after the previous two so that you can then refine your choice and get more specific.

Scope of the Campaign

Just how big do you want it?