The setting of The Legend of Sleepy Hollow in America is significant for several reasons. Firstly, it allows for the exploration of uniquely American themes such as the tension between traditional rural life and modern urbanization. Secondly, the story is able to incorporate American folklore and legends, such as the Headless Horseman, which adds to the authenticity of the setting. Finally, the story's setting in America allows for the inclusion of historical events, such as the Revolutionary War, which are referenced throughout the text. Overall, the American setting of The Legend of Sleepy Hollow adds depth and richness to the story, making it a uniquely American literary work.