The setting for "The Open Boat" is a “dinghy” (a lifeboat) on the sea, specifically the sea along the coast of Florida. “The Open Boat” is based on the story of survivors (Crane being one of them) from an actual ship that sank on January 2nd, 1897, and the events of the story take place in the days after the ship's sinking.
The January sea is representative of nature more broadly. It is unpredictable, changing colors and moods frequently. Sometimes the sea is helpful and sometimes it's an obstacle to the men. Often, it is described as beautiful and uplifting. Crane writes:
The sun swung steadily up the sky, and they knew it was broad day because the color of the sea changed from slate to emerald-green streaked with amber lights, and the foam was like tumbling snow[…]
The emphasis on the beauty of the sea in the broad day shows how nature can be gorgeous and full of vibrant colors. However, it is not always this way, for the sea can also be dark and foreboding:
A singular disadvantage of the sea lies in the fact that after successfully surmounting one wave you discover that there is another behind it just as important and just as nervously anxious to do something effective in the way of swamping boats. In a ten-foot dinghy one can get an idea of the resources of the sea in the line of waves that is not probable to the average experience, which is never at sea in a dinghy. As each slaty wall of water approached, it shut all else from the view of the men in the boat, and it was not difficult to imagine that this particular wave was the final outburst of the ocean, the last effort of the grim water. There was a terrible grace in the move of the waves, and they came in silence, save for the snarling of the crests.
Here, the sea is overwhelming and hostile. It is a never-ending obstacle to the men. In its foreboding power, the sea is representative of nature in the broader sense and the world as a whole.
The large, powerful sea is contrasted with the small and capricious lifeboat (a “dinghy”) the men exist in. The boat could tip at any moment and is subject to the elements. Their craft leaves them defenseless against nature, such as gulls and sharks, showing that the inventions of man cannot protect them from harm indefinitely.
The men are, due to the small nature of their space, forced into cramped conditions. This physical feature, even if it adds to their struggle, also fosters a special brotherhood among the characters.