@Lanefan
I feel like your analysis of the two play structures smuggles in a view that setting must be predefined that is not a fundamental conceit of that second play structure. That second play structure uses setting as a means rather than an ends. We only define what we need for play to happen, often on an as needed basis. The event in step #1 comes first and is later justified.
If the inciting event is, say, that someone has just stolen a family heirloom of which I'd been given custody - I heard the culprit upstairs in my home but saw nobody; then the details of my-as-player/character's immediate reaction (to try to find/chase the thief) are in at least some part going to be based on the surrounding environment. Some examples:
--- if I'm in a city or town I can ask for help from others*1 ("did you just see someone go by carrying something that looked like [my heirloom]?") that I can't ask for if I'm in a cabin ten miles out in the woods.
--- if it's snowing out, or if there's snow on the ground, I can look for fresh tracks in a rural area that I can't very well look for in a busy city.
--- the layout of my home and-or neighbourhood will play a role in determining my action e.g. what route might someone have taken to get down from upstairs on the outside and-or how quickly can I get to where that potential route meets the ground?
--- other than the thief, am I alone in my home or is anyone else there; and if so, how many; and have any of those people been harmed?
*1 - whether it's day or night will make a difference here also, as will the weather conditions, as those things will probably affect the number of potential helpers/witnesses I can quickly access. If it's a cold rainy night, for example, I probably won't bother going the look-for-help route as there's most likely nobody out there.
It's also important to note that the player is not free to just do whatever they want. They must address the threat in some way in step #2. Casually exploring their environment will generally only lead to more trouble.
Fair enough. My point is that the environment and-or setting has direct effects on and influence over
how I go about addressing that threat, as noted in the example above.
In step #3 fallout does some work. What happens must have an impact on the player character in some way. It should change the way they view the world or themselves. It's not just a naturalistic extrapolation of what should happen.
Here, if I don't recover the heirloom I'm likely to view myself as a failure not worthy of carrying on the family name.
In general, there seems to be this desire to extend an emphasis on world building and exploration of setting as like a thing onto games that do not feature either to any great extent in their play process. I'm not quite sure why.
Even if the setting never gets explored it's still there as a background in the moment, much like a movie set as someone (you?) mentioned upthread. That setting is there to answer the following type of questions, which in theory will always*2 be known by my PC and will affect pretty much any scene even if only by providing atmosphere:
--- where is my character in relation to anything or anyone else relevant, or am I lost
--- what time of day/night is it
--- what's the weather doing
*2 - except in very unusual circumstances e.g. I've jumped to a different world where day and night have no meaning