This is a theme that actually doesn't come up very often in my reviews/commentaries on VNs these days, primarily because most VNs use what settings - whether those of the characters or of the game itself - to at least an adequate degree.  There are actually very few VNs that include setting elements that are interesting but never end up used... because it irritates the hell out of people who actually pay attention.

The most recent example, which made me go off on a foul-mouthed tirade in private and a bash-post in my blog, is Hanidebi.  Just as an example is Aoi, one of the heroines.  Aoi is from a family that is extremely old (think the tenth century) and powerful/wealthy.  Even today, such families tend to exert a ridiculous degree of influence/control over their kids, especially their daughters.  In VNs, this tends to be even more extreme... so why is it that the only element of such a family that is used in the game is her moral upbringing, rather than her ties to her family or other issues that might have come up as a result of the type of family she was raised in?  Most VNs, even if they don't make it central to the story, at least would deal with the family issues (getting them out of the way) during the course of the game.  Moreover, she also has a yandere yuri kouhai who was supposed to be an ongoing source of humor for her path... but who mysteriously faded into the background early on in her path. 

That is failing to utilize the setting.

The same goes for Eufonie's other work, Koiken Otome, where they dramatically speak about the monsters who threatened the world and the purpose for the powers the characters possess... and then keep the game a fantasy version of a slice-of-life charage from beginning to end.  OK, it is perfectly fine to use such a setting in a fantasy charage... but when you introduce something like that, it is only natural to use it at some point in the story...

This is a relatively rare issue... but when it does come up, it is rarely as bad as the two games above.  Most of the time, it is simply 'not going far enough'.  However, every once in a while, I come across games like these, that fail utterly to use the elements they presented.  I felt worse than the first time I ran across an NTR nukige by accident.