Choose a place that is small enough to allow you to include details and the explanations that you think are necessary to help the reader visualize it

I think that this question is asking you to choose a particular setting location in the story and explain what details from the text help a reader more clearly visualize that particular setting location. One key to this question is the word "small." This means don't pick something as broad and general as "Waknuk society" or "the Fringes" for the setting location.
I think a couple of locations could work well for you to pick. The story's opening setting location with David and Sophie out of the town and by the creek would work well, but I think an even better setting location to choose is David's house. More time is spent here, and I believe that the narrator gives readers more specific and concrete details about David's house than any other setting location in the story.
Chapter 2 is where I think the best information about this setting can be found. David is coming home after being with Sophie and her family. As he approaches his family's property, he begins giving readers descriptions of the surrounding property before giving information about the inside of the house. The property itself is fairly large. David reaches the clearing of the home's property, and he says that he saw the house across three or four fields. David does state that his house is "not easy to describe," but he does an adequate job. The house is old, and we know this because David tells us that it was originally built by his grandfather. Since that time, the house has grown greatly. It now includes sections and rooms for the farm hands as well as sections of storage. We are told there are cheese rooms, wash rooms, barns, stock sheds, and stores. All of those are arranged in shape that mostly encloses a center section.
The house is a mixture of wood timbers and brick. The main space inside the house is a large kitchen and living room. In that space is a huge fireplace that is made of both brick and stone. Interestingly, the floor is also this mixture of stone and brick. Not much furniture is described, but we are told that the furniture is whitewashed to match the walls. As for decorations, the house doesn't have anything other than sayings from the Repentances. All of those sayings that hang around the house emphasize the need to be on the lookout for Deviant genetics. They say things like "Blessed are the norm" and "Keep pure the stock of the lord." We are also told that those sayings are placed in key locations. For example, the great fireplace is a point of pride for the family, and it begs attention. For that reason, there is a saying placed on either side of the fireplace. A third saying is placed right by the door that leads to the yard. This makes it impossible to go through the door without being reminded to "Watch thou for the mutant."