I'm not quite sure if this should go here or in plot development, but here goes. Some time ago I started writing one of those "normal person discovers magical world" stories, but I didn't have an actual idea for what this world would be like yet (I just had an idea for an opening I wanted to get down). After a bit of thinking I came up with the idea that the citizens of the magic world would all be hybrids between humans and creatures humans generally hate. Now having an idea to work with, I made a few attempts to get the plot rolling, but I found it just wasn't working. I ended up tracing the problem to the human; I was just way more interested in the world than writing a believable personality and reaction to said world for this girl. So I dropped her, moved what had previously been a side character from the fake world to the forefront, and things started to go a bit smoother. Only problem is, now I'm kind of worried that the whole setting is completely pointless. It's heavily influenced the scenery description, and there are a few small things tied to it, but overall I really could write the thing in a more generic setting and I wouldn't really need to change much. So, is it pointless to place a story in a setting that doesn't effect it? Would it be smart to just kind of shelve the thing until I can think of a plot that relies on its setting?
That sounds like a better idea, sacing the setting for the story it actually matches up with. As much more work as that's going to give you for the present story, at least you can take your dough out later for a different story's setting/crust. Do you have any clear ideas about the themes of the story? Going over those might help keep things rolling.
I think you want to put your focus on your characters for the moment. What is it that they want? What obstacles are they trying to overcome? As you develop the idea of the story, you can add things to your world that can either help or hinder the characters from reaching their goals. The setting will affect the story, no matter what it is. You just have to figure out what kind of effect you want it to have, which will shape what it looks like. You’re not satisfied with the setting you have now because there's nothing in the plot that requires it to be much different from any generic setting, so you probably should think about what you can change in your plot or your characters that would require something more abnormal.
You have story but no plot. OK, so you have a magical world with citizens that are hybrids between humans and creatures humans generally hate. Not necessarily, but you do need a plot. You really have to start with, what is the story you want to tell, not how do you tell it. @jaebird is right, what is it that the characters want? What obstacles are they trying to overcome? How does being part human and part character the humans dislike create conflict and how do they come to terms with their predicament?
I don't think stories necessarily need a reason for them to be set in certain places. It's great when the two are linked but by no means is it essential. Like, why is Harry Potter from London? Why did LOTR have to take place in Middle Earth and not some far less elaborate fantasy world? Why can't the same themes and message in Narnia be expressed in a story that doesn't involve the magical wardrobe and alternate world? Sometimes, seriously, it's really just down to what you find interesting. And if you find the setting interesting, then you're more likely to be able to find a way to tell the story in an interesting manner too. The setting should add to the plot and atmosphere of things, but the setting doesn't have to be part of the plot per se - it just has to enrich the story. The time to think about changing the setting is when the setting complicates the story you want to tell to the point of hinderance. But truth is, it doesn't sound like you even have a story. You have a world, not even a premise just yet. So how on earth do you know if the setting helps the plot or not? And without knowing that, how could you possibly answer the question of whether you should set the story somewhere else?
What I've mentioned in the OP is not all I have for the story. I do have a plot, I just didn't elaborate on it at the moment since I didn't really think it was necessary to go into for the question. I don't really think about themes in my stories, honestly.
