A standard roleplaying environment: the tavern. This is another easy one to create in your own home, providing you have a large enough group of roleplaying friends. Let us assume your PC group is no larger than five, and that the rest of your friends can be NPCs. Let us also aim for an exceptionally seedy and unscrupulous city tavern.
In a good LARP it is desirable to separate the players out individually at some stage, because they are more suggestible and afraid when they are alone. Some form of individual challenge is probably the best way of doing this. One possible setting for this is a cave system, and it is probably one of the easiest to recreate realistically, and one of the most perfect for playing on fears of claustrophobia and darkness.
You pass through a woodland with a floor that seems remarkably clean of debris. Suddenly your attention is drawn to a twisted bit of wood by the trail side, a short broken twig with several stubs of branches along its length and most of the bark missing. When you reach it, the twig blurs and turns into a small brown lizard, caught in the middle of its body-twisting run. The little reptile darts away down the trail with impossible speed, no doubt magically enhanced, and is lost to sight in a moment. Now someone knows you are coming...