Japanese-controlled San Francisco, the Rocky Mountain States, 1962
We sometimes roll our eyes when people say, "the setting is almost like a character." But here, even we have to admit that the setting is pretty important. Info about the big picture of the setting gets dropped throughout the book. So, Frank Frink thinks about the terrible genocide the Nazis have done in Africa (1.61), whereas Childan thinks positively about the Nazi project in the Mediterranean (2.57). These little bits of information add up to a world that is radically different from our 1960s, a world with rocketships instead of television. (Sounds terrible, right?) Eventually, you can kind of put together a map for this world, which would look something like this.
Yet, except for a very brief moment when Baynes returns to Germany, all of the action takes place in America, either in San Francisco (the arts and crafts plot and the spy plot) or in the Rocky Mountain States (the arts-spy plot of Juliana Frink). These settings are very different from ours. For instance, they have no laws against marijuana and the I Ching is pretty popular. But these settings also have a solid grounding in our own world. So, when Juliana travels to the big city of Denver and goes shopping and wants to go see a show with a big star—that sounds like something that could happen in our world. It doesn't matter if the Nazis won or not. A person who lives in a small city will probably go shopping and want to enjoy the big city fun.
And this San Francisco may be very different from the San Francisco that we know. There is, for instance, no WiFi or Angry Birds in the 1960s. But the particular places we go to are all pretty normal and familiar: a government office (Tagomi's), a ritzy boutique store (Childan's), and a factory and a small apartment (Frank Frink's). These are all places that could and do exist in our world.
That's useful for Dick, since he doesn't really describe the setting all that much. Now here's a test: close your eyes and try to describe the room you're in. (Are you still reading this? Then your eyes aren't closed. Gotcha.) There's probably a chair (you're sitting in it) and a computer and a desk. Maybe there's your copy of The Man in the High Castle and… some walls? As Dick knows, unless you're shopping around for an apartment, most people don't walk into a room and start thinking about every single thing. You only think about the things that are important or that you're using right now. And since Dick uses a tight "POV," he only tell us what's important to his characters or what they would notice.
So, when we meet Frank Frink in his apartment, we learn that there's a "heap of clothes" and a clock on the dresser saying that it's late (1.40). And all that tells us that Frank is either messy all the time or had a rough day yesterday—probably a rough day since he's waking so late. Or take Tagomi in his office: he's a powerful man, we know, because he has a great view. But he's also a worried man—and we know that because he doesn't care about the view but wants to spend more time with his I Ching.
Here's another way to look at character and setting: we learn about characters by seeing how they fit, and don't fit, their setting. So we meet Tagomi and Reiss in their offices because what's important about him (for the plot) is their positions. Though we also see how these two officials aren't just officials. They both have their hobbies (collecting Americana for Tagomi, reading books for Reiss) that have nothing to do with their jobs, but that tell us a lot about them.
There's one last setting that we have to mention, which is when Tagomi slips into our world (or at least a world where the Nazis and Japanese lost). We know that world is closer to ours because there are more cars and there's the Embarcadero Freeway—which are really the important things about our world. Well, we also know that the Japanese lost in this world because no one gives their seat up for Tagomi and one even calls him "Tojo" (14.128). So, it seems a lot like our world in those ways.
Again, what's most interesting about this setting is what it tells us about the character. Tagomi doesn't spend a lot of time in this world (say, getting the records of the great Jewish comedians), and is horrified and bothered to be here—even though he knows that the Nazis plan to make his world even worse. What's that about? After escaping a "Nazis won" world, why does Tagomi try to get back? Is it because he's just used to that world? Is it because, even if that world is worse in some ways, it's better in others? (For instance, Tagomi's world has less car pollution.) Or is it because Tagomi wants to help make his world better? This is an open question (that is, we don't know), but we feel this is a question directed at us. Our world is better in some ways, but maybe worse in others—and what are we going to do about that?
(Lastly, we should add that Philip K. Dick spent a lot of time in the San Francisco and wider Bay Area. So, if he's spending lots of time researching the Nazis and imagining this strange future, maybe it was largely helpful to start with an area that he knew well.)