There is an important distinction to be made between premise, plot and setting. People read for the plot, imagine the setting and become intrigued with the premise. Come for the premise, stay for the plot you might say. It may seem obvious that there is a difference between all three but in practice it can be hard to understand how they work together or against each other.
The premise is the base concept behind your story. For example: An airliner crashes on a mysterious island inhabited by a strange and unseen monster. That is a premise. You can get a lot out of it without having any sort of plot. You could write about some characters getting on the plane. Then you could write about the way the plane crashes and the immediate reactions of each of the characters as they stand around in a daze wondering what has happened. Eventually though you’ll run out of premise and you’d better have a plot handy or people will lose interest.
The setting is the world the story takes place in. Sometimes this is tightly bound to the premise, but still separate. For example you could have your story take place on a tropical island cut off from the rest of the world. You could have mysterious anachronisms and misplaced animals and a force capable of healing people. The setting can be strongly in focus or just a backdrop to a dramatic plot. You won’t get much out of a setting without a plot, but you could have the before mentioned characters wander around bumping into polar bears and spotting ghosts of their dead fathers. Once that novelty wears off you’d better have a plot handy…
The plot is how everything happens and provides the motivation and direction for the characters and so indirectly the reader. It helps if your plot starts at point A, moves to point C through point B. Some authors get tricky and play with timelines by starting at B, head toward C but explain that direction through revisiting A. The point is you need to have an end point and you need to let people know you are heading toward it. A trick ending, like M. Night Shayamalan likes to have will only work if the plot looks like it is leading one direction before twisting. If the plot is directionless to start with it doesn’t matter what ending you have because the entire plot will feel like a trick.
Bring it all together
The best thing to do is bring it all together. Have a powerful, driving plot exploring an intriguing premise in a rich and interesting setting. This is much harder than you think. Many stories come out of a premise or a setting. You might be thinking “Wouldn’t it be cool if when Niel Armstrong landed on the moon he discovered what looked like an Egyptian ankh medallion inside a mystic circle.” That sort of premise can excite you to start writing. You think you’ve got a plot but really you only have a premise. Once the medallion is found and Armstrong says “Wow” then what? Likewise you can have an exciting science fiction setting with spaceships and aliens but if your plot is simply an alien drug dealer murders a guy and the good guy has to catch him then why bother with the spaceships? Why have an alien drug dealer? You’d better make sure you have something in your setting that means your story couldn’t take place in any other setting without completely changing everything.
The West Queen came about as an organic mix of setting (an old world I created for a roleplaying game), premise (What if a god was a force of change only and it was people who made that change good or evil) and plot (the rise and fall of a number of powerful people / families). So I’ve reached book 2 and I’ve plotted out book 3 to an extent (the final). On the other hand Angel Bones is all premise and setting and I ran out of plot. I like the premise and love the setting so I’ll be taking a step back and coming up with a plot before resuming writing of that book.