Setting isn't just buildings, weather, and stuff--it's characters, too. Setting establishes:
- Place and time (in our example, a modern-day college town)
- Mood (an ordinary college town--not Miskatonic U.)
- Theme* (education is a part of real life, not separate from it)
By drawing the setting back to the "so what," you're establishing the unspoken rules of your book. "This story will be set in a normal college town. I promise no tentacled monsters will invade. I promise this story will not be about the New York publishing industry." All kinds of things. --On the other hand, if you want a setting where you can mess with the reader's underlying assumptions, you at least have to drop a few hints that everything is not what it seems; otherwise, the reader is going to feel cheated. "I thought we were playing Romance in a Small College Town! Why didn't you tell me you were playing off the Gothic Tragedy deck?!?"
How to create "setting" characters depends on whether they relate to the setting's place/time, mood, or theme.
Place/Time. What kind of characters might be found at this particular place and time? What type of roles do people tend to play in that society? What kind of person would naturally fill that type of role? These type of characters tend to be more orderly, more typical. --If you're trying to establish the ground rules, you're trying to establish order, and you're trying to avoid random elements.
Examples are a professor in a tweed jacket who always smells like cigarettes, a secretary with an annoying voice, or a student who wears the same pair of sweatpants to class every day.
These characters establish the norm from which other characters deviate. Ironically, giving them interesting details is counterproductive.
Mood. What's the first impression the reader should get from the setting as a whole? Creepy? Friendly on the surface but dark beneath? Ordinary, something to be taken for granted? The characters should "sum up" that impression. However, if you have a setting that is "Seems like X but is really Y," you might go with one character who shows both traits or a pair of minor characters, one for each characteristic. You could even show them in conflict.
Mood is the root of foreshadowing, by showing a small example of an idea or conflict that's going to come into play later. Really, the more straightforward the mood is, the less interesting your story's going to be. You can use minor characters to foreshadow, the same way you can use a chance event.
Examples of "mood" characters are a next-door underage neighbor boy who's nice but always trying to buy beer; a landlady who hates college kids but likes the main character; an art student with big dreams and a bigger mouth. All point toward an ordinary college town, a place that's both comfortable and a little annoying. Marla likes these people, but they all rub her the wrong way--just a little.
An example of a "mood" character used to bring out foreshadowing is a renowned college "bad boy" who dies in a motorcycle crash.
Theme. Themes are the smaller building blocks of the big "so what." Some good themes for our story might be "Bad boys have more fun," "Comfort food isn't a good steady diet," and "Constant novelty is boring." If the "so what" relates to the book as a whole, themes relate to smaller parts of the story. A theme is the "so what" of a scene or a chapter. --Themes don't have to run all the way through the book as long as they relate to the main "so what," but it's kind of fun to have them show up again. "Ah, Marla. You thought you figured out a steady diet of bacon and chocolate ice cream is bad for you, but we're going to stress you out so much that you do it all over again. You don't learn very quickly, do you?"
Minor characters that help carry out theme are a lot like characters that help carry out main character development. The difference is that these characters can be more caricaturized. The girlfriend that introduces Marla to a bad boy with a wink and a nudge, to get Marla to "loosen up"; the grocery-store boss who supplies Marla with a case of damaged Oreos; the self-involved acid-head preaching enlightenment--they can all be a bit less human than the characters who end up poking around in the main character's very soul.
However--be careful. Too much caricture and the minor character will be unbelievable rather than funny or resonant.
In the end, the characters who solely add to setting are less human, more stereotypical, and less interesting than characters with other purposes--but you still need them. I find it more fun to give minor "setting" characters other purposes, either when they're introduced or later on--I like letting the reader dismiss the character as a piece of furniture for a few chapters, only to have the character become essential to the plot or evoke a soul-searching conflict later on.
*This theme pours into the "so what" by letting Marla run away from her conflict with Hank by pretending her education is more important than dealing with her feelings for him. She tells herself she can't determine her own fate because she has to study for Biology.