Era and Place 
Choosing an Era is crucial, as nothing existing after that date should ever appear on the layout.
Season is important as it affects rail traffic, especially of farm commodities. Winter is best avoided, unless modeling a part of the country without snow (elsewhere on the layout is okay, but modeling snow or rain on the trains themselves is strongly discouraged). Autumn may be the ideal season for a model railroad, due to it being the harvest season, and also due to businesses stockpiling for the winter.
Although trains from between approximately The Spanish-American War [EXAMPLE] and The Great War [EXAMPLE] are of an ideal length, traffic level, and operations sophistication for O-scale 3rail model railroading, until recently (except in the case of Traction) there has been a limited amount of 3rail R-T-R equipment available to modelers reflecting the time periods from before the nationalized United States Railroad Administration. Most 3rail R-T-R equipment reflects either gigantic equipment from the present day, or northeast coast fallen-flag Class-1 equipment from the steam to diesel Transition Era of the nineteen fifties.
However because modelers have the ability to be Freelancers, they can believably modify reality slightly (e.g., assume Pipelines, Airlines, Trucks, and Busses no longer receive unfair government dispensation, and must compete with your railroad on a level playing field) to create a railroad tailored specifically to their taste. It would behoove Freelancers deciding on a Time/Location to also be different from the typical O-scale 3rail modeling crowd. This means avoiding the entire 50s transition period of about '42-'59 (an impractical O-scale era to wedge into todays smaller train rooms), not modeling mountains (including Horseshoe Curve / Tehachapi Loop themed layouts), and especially not making your featured roadname be the heavily over-modeled Pennsylvania, Santa Fe, Union Pacific, or Rio Grande railroads (prime target railways for nit picking critics).
Excellent Eras to consider are:
1- the Merger Era of around 1982 [ESSAY] - {freedom from ancient regulations, breakups and mergers, an explorative mishmash of old and new methods, and regional passenger service having serious resurgence potential}.
2- the Kennedy Era of around 1962 [EXAMPLE] - {now shorter passenger trains, most freight cars not yet lengthened, more powerful 2nd generation diesels, and still many smaller and diverse rail customers}.
If you insist on running Steam, consider:
3- a Pre-GreatWar Era Regional Railroad of around 1916 [EXPLANATION] - {smaller firebox steam locomotives, ubiquitous passenger traffic, short colorful freight cars, and interactions with competitive electric railways}.
If you are after that feel of friendly small business operations, consider:
4- a Shoestring Contemporary Era Short Line of around 2016 [EXAMPLE] - {casual switching service within suburban surroundings, refurbished motive power, and huge interchange cars appearing in just ones and twos}.
Although once a popular era, there are several excellent reasons to avoid the 50s Transition Era. Because there is both Steam and Diesel on the rails, there will be duplication of fueling/maintenance facilities (one for Steam and one for Diesel), which will consume a lot a precious layout real estate. Superpower steam locomotives and multi-unit diesel sets, along with long passenger car consists, force long passing sidings and wide radius curves. Rarity of radio makes real-time communications difficult, and dispatching still relies upon local towers and piles of physical paperwork. Passenger car heating and cooling is another annoyance. Also, during this period much of the railroads equipment was in a dilapidated state due to overuse during the war, a condition that is poorly represented by most 3rail R-t-R rollingstock.
If thinking of modeling the Transition Era, consider that your personal layout will probably end up being merely a scrunched clone of the local Transition Era club layout. There is so much more in the history of US and Canadian railroading that can make your personal layout both more unique, and better suited to your restricted layout space. Why not give it a chance?
Season and climate are often overlooked by model railroaders, but both can have a significant impact on both the layouts "feel" and the type of traffic being moved. Hot climates will still have seasons, but they will show less variation than in cold climates. Areas which are typically hot or cold (or which are extremely arid or swampy) will affect rollingstock and structures, and obviously the living scenery.
In Cold weather, older passenger cars (which railroads often kept in service for decades due to lower wear and tear than with freight cars) utilized steam heat from the locomotive, so all Diesel engines used in cold weather passenger service had to be the lengthened ones that contained a steam generator, or had to haul a special steam generator car (both of which require obtaining water). This forces longer O-scale passenger trains (a space problem in O-scale), and poses a logistics problem. Modern, and surviving older passenger cars which have now universally been expensively retrofitted, utilize electricity (Head End Power) for heating, eliminating the steam generator problem as diesel passenger locomotives will have, and diesel freight locomotives can be fitted with, HEP generators. Of course inversely if these passenger cars are pulled by a legacy steam locomotive a special HEP generator car will be needed.
Hot weather also poses logistics issues, as non-retrofitted passenger cars (such as many older Business/Private cars) will still utilize Ice for cooling (requiring the making and storing of Ice). Modern and retrofitted passenger cars now use electrically powered Air Conditioning; which means that all Steam locomotives and freight diesels in summer passenger duty will either have to be equipped with a HEP generator, or haul a special HEP generator car.
The Winter season is highly represented in 3rail rollingstock, scenery and structures, although the Christmas theme is usually unprototypically implemented except for sometimes in structures and scenery. Prototypically it is a time of lower railroad traffic, which may be a benefit on a tiny layout.
The Spring and Summer seasons are similar, although the living scenery will differ. In spring there will be more express traffic of perishables such as berries and spring flowers, while in summer there is an increase in tourism and fertilizers. For both seasons there will be an increase in construction materials traffic.
The Autumn season might be the most interesting season of all, including within the living scenery. Traffic will peak, as this is the harvest season, as well as the time when industries are stockpiling for winter.
Another consideration is the Region [EXAMPLE] of the country that the railroad will be located in, as this affects landscape look, weather defense, structure style, and commodity options. Within your chosen region will also be several competitors and friends [EXAMPLE], vying for your railroads customers. Because it has been done to death, you should consider avoiding the North East Rail Corridor, and instead try something offbeat, like Canada. Remember that your model is simulating a Business, so its believable customer base (the bulk of the industries it services and the traffic it carries) will be dictated by the railroads assumed physical location.
Although there is no trick to building a humongous model railroad, the challenge comes in fitting an interesting layout into the typically small spaces available to the average apartment and slab floor home dweller. The choice of place in this situation becomes crucial, as it is far easier to for example, make a compact dockside scene more engaging than an open prairie scene of the same acreage. Focusing on modeling vignettes is not only more practical, but also a lot more believable than trying to fit the entire Great Gulch, Yahoo Valley & Northern onto a sheet of plywood. However even a simple scene, such as for example a single railroad crossing, should establish a feeling of place. Palm trees, adobe tile roofs, and Southern Pacific rolling stock passing over the crossing will give an entirely different sense of Place than maple trees, steep pitched roofs, and Conrail rolling stock would.
While perfectly fine to add a single justifiable incongruence onto your layout, keep everything else boringly Place Typical!
Note that although modeling rugged mountainous terrain was once popular (to obscure trains and make the layout seem larger), prototype railroads actually do everything they can to keep away from mountains. It would be too costly and unprototypical for them to tunnel through that ridiculous mini-mountain [EXAMPLE] in the corner of your layout, so they would either make a deep cut [EXAMPLE], or most probably simply relocate the track elsewhere.
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