Currently, my players are exploring the ruins of Castle Gygar which, as you may know, is the small introductory dungeon from the red box basic edition. I'm not planning on dwelling a long time in that dungeon as I used it mainly to (re)introduce my players to the rules. Frankly, it's not a very good dungeon but it serves its purpose. When the players eventually move on to bigger and better dungeons, I will eventually choose the Known World as the setting. For those who don't know, the Know World is Mystara though, for some reason, I don't like the name Mystara. I'll stick to the Known World. It hints of a more mysterious and primeval place, akin to my own swords & sorcery tastes as opposed to epic high fantasy.
The reason I use it as a setting, perhaps breaking my own rule of only using material from 1976-1985, is two-fold: first, it's a very well done setting, first hinted at in the Cook/Marsh Expert Set, with a great line of gazetteers, although not all are up to the great standards set by The Grand Duchy of Karameikos (1987); second, I like consistency. I'm a big proponent of the "make the world as you play" theory, however, I'm not very good at designing things from the ground up. I enjoy picking up stuff, no matter how generic, and adapting it to my tastes. And the Known World provides a loot of inspiration. Even if you don't like everything it has to offer, you'll find something you like.
The characters will eventually interact with NPCs and institutions that need to be more clearly defined as to provide flavour. Our party cleric needs to know which church he belongs to or his favoured deity. I may not use the Known World as is, but I will surely use it as a foundation upon which to build my own take of the setting.