To understand the setting of Hunches in Bunches, we're going to need to travel back to the beginning of the 20th century and then pop back to the present. Yes, we know mental time travel can be awfully taxing—with brain paradoxes and whatnot—but it's necessary. Trust us.
Around the turn of the 20th century, the German art community originated movement called expressionism. It soon became all the rage in the art world, and any artist who was anyone was doing it. In this new form of artistic expression:
[T]he artist [sought] to depict not objective reality but rather the subjective emotions and responses that objects and events arouse within a person[, accomplishing] this aim through distortion, exaggeration, primitivism, and fantasy and through the vivid, jarring, violent, or dynamic application of formal elements (source).
Yes, the realism of the 19th century was on its way out, and subjective expression took its place.
We're sure you've seen some examples of expressionism at work. Perhaps the most famous expressionist painting is Edvard Munch's The Scream. Both Franz Kafka's The Metamorphosis and James Joyce's A Portrait of the Artist as a Young Man can be read as expressionist works of literature. And The Cabinet of Dr. Caligari provides an excellent example of expressionism in cinema.
In its birth place of Germany, expressionism met severe opposition by the Nazi party, who censored the movement, calling it "degenerate" (source). But by then, expressionism has spread into the minds of many artists in other countries and evolved into other avant-garde forms as well as postmodernism.
Yes, Dr. Seuss's use of setting in Hunches in Bunches would do any expressionist proud since the house the boy lives in morphs and changes depending on his subjective state of mind. You want examples? Oh, we've got examples.
When the boy realizes "[he] shouldn't be in… but OUT," the house suddenly produces a window showing a brilliant sunny day complete with Seuss's classic rolling hills (6.5). The window isn't seen until the exact moment the boy has the desire, as if magically appearing. Also, the window is almost the size of the entire wall, symbolizing the immensity of boy's craving to be outside at that time.
Later, when the Spookish Hunch appears, the house's white walls become a dark grey color dressed in shadows. These same walls also cut through the room at sharp, foreboding angles, demonstrating the boy's aversion to this Hunch's suggestion. Still later, another window appears, but this time it's up higher on the wall than any person could possible see out. This window symbolizes a brand-new desire brought by the new Up Hunch, which is, of course, to go up.
So the setting of the house is very much in line with the expressionist movement. The boy's subjective state of mind distorts and exaggerates the house, altering it to look in-line with his emotional state. And since this kid can't make up his mind about anything, the poor house doesn't get much of a break either.