Demonstrate how the setting of the story exemplifies the theme of developing self-awareness. When does the setting reflect the narrator becoming self-aware?

The name "Greasy Lake" foreshadows that the night's initiation could entail waking up to some of the darker aspects of life. The dark and seedy setting of the lake and forest is symbolic of the characters having to face the dark and seedy side of themselves.
The darkness of the setting makes the case of mistaken identity possible and the ensuing fight with the "greasy character" gets the night off to an exciting start until the narrator strikes the dodgy looking stranger with a tire iron and he falls down, apparently dead. Being alone by a dark lake in the woods with the guy's frightened girlfriend in the car brings out the worst in the boys. Who is going to stop them from doing whatever they want?
After a series of harrowing events in the lake and the woods the boys emerge from the darkness to confront yet another arriving car. The intoxicated girls take one look at the boys and remark that they look like some "bad characters." In a way they are bad characters.
This is the moment the narrator becomes self-aware. The setting of their emergence from the darkness of woods and being labelled "bad characters" is confirmation of the change that has taken place. Their new awareness of their dark side and their choice to leave that behind in order to get back to a less dangerous situation indicates the new self awareness. They reject the girls' offer of drugs and head home traumatized but wiser from having confronted themselves and both failed and ultimately succeeded in their initiatory test.