Re "setting up": It definitely means "sitting up." I'm not sure if Wilder's usage reflects a regional pronunciation or regional usage of "set" instead of "sit." As I see it, it could be either, but, as I cited in another post, it's a characteristic of Wilder's writing here.
I basically agree with Gibson and others who support that direction (although contrary to #7, both of the underlined sentences make sense to me in context).
Like Hecuba - UK it took me a bit to figure out hat "straining away" meant "working hard" instead of "struggling to get away from" (and I suspect that the latter is how keeblerelf was interpreting it, leading to confusion).
I would also add that "only this one..." was a bit confusing to me at first. I was understanding "only" to be a conjunction meaning "but" or "however" instead of a modifier meaning "solely."
I suspect that Wilder is using "stars" figuratively, in part, to mean "worlds" or "solar systems," which would include associated planets. (Of course there is no life on stars!) Thus, the leap from "up there" to the Earth isn't so extreme.
Even if, as he says, scholars aren't in agreement about it, the stage manager seems to have accepted the fact that there is no life outside of the Earth, so he says that it is only on the Earth that people work so hard ("strain away") that they need to rest every sixteen hours. (Re #2: In English, "every 16 hours" can be taken to mean "after 16 hours awake, we need to sleep for 8 hours.")
Also, I fully support Dragon's #5 in response to #3. I've indicated the same thing in other threads.
However, this question is something totally different than the multitude of questions that could have been answered simply by looking in a dictionary (or could have been phrased, showing a bit of self-initiative, "I found these definitions/translations in a dictionary [citation from dictionary]. Which is meant here?" ). I could imagine that this passage could be the subject of a discussion in a ninth- or tenth-grade high school English class in the US.
It may well be that somewhere on the Internet there are teaching resources for Our Town in which this passage is indeed addressed, but they could likely be difficult to find, even if keeblerelf were willing to do a bit of googling on their own. Thus, I'm more than happy to contribute to working out an answer to this question.