Transformation is a big deal in As You Like It. In the Forest of Arden, some characters literally transform themselves by cross-dressing, while others shrug off their city-slicker identities and live as rustic country-types. Physical transformations aren't the only big changes at work in the play's pastoral setting. Except for the endlessly melancholy Jaques, most characters undergo some sort of psychological or spiritual transformation in Arden. Often, these "conversions" are sudden and seemingly miraculous, as is the case with Duke Frederick and Oliver, who change their evil ways upon entering the woods.
At times, this theme allows Shakespeare to explore the nature of the theater, which requires actors to transform themselves on an ever-changing stage. At other times, the characters' physical and spiritual conversions allow Shakespeare to comment on humanity – we may be deeply flawed, but we are also capable of changing for the better.
Although Duke Frederick's and Oliver's "conversions" are sudden and improbable, Shakespeare seems to be making a larger, more important point: despite the fact that human beings are capable of cruelty and treachery, they are also capable of redemption.
The Forest of Arden is an important setting insofar as it is capable of transforming characters almost as soon as they enter the woods.