What is the significance of the setting in "Hills Like White Elephants"? How does the social context of the time impact how Hemingway tells the story?

The time period and the cultural context go well with the physical location of the story. The narrative takes place in a train station, and the characters are in a state of transition. They are implied to have been traveling together, moving freely and aimlessly about on trains throughout Europe. The location of the story in the train station suggests that these two people have not found a home for themselves (emotionally, socially, philosophically, etc.).
When Hemingway wrote the story, the trend toward "modern" thinking, living, and designing was widespread. Hemingway himself was quite a free spirit who traveled about Europe, partied with his friends, and wrote novels and short stories about people like himself.
The cultural world was in a state of transition just like these characters—literally and figuratively. Nonetheless, certain subject matters were still not openly discussed or written about. Homosexuality, for instance, was rarely mentioned except in veiled, coded language. The story's focus, never overtly stated, is the question of whether Jig should get an abortion. Readers have argued endlessly about whether the story is pro-woman, anti-woman, sexist, or feminist, but the impact rests heavily on the taboo of its subject matter at the time.
Although it loses some of that shock value for current readers, though, the unspoken, awkward, and glaringly important detail still has a pretty heavy impact, probably because the problems troubling this young couple have not disappeared from the world in the past century.