The acting is all here, it’s a majestic example of what true acting is. This movie is with little or no special effects, long scenes, very little action. 90% of it is Spade talking to people. And yet, it manages to be gripping as you correctly say. This time I particularly enjoyed Lorre’s performance of Mr. Cairo, which is a delicate transposition of the character found in the book.
Peter Lorre was superb as Mr Cairo, but so was Sydney Greenstreet, - a compelling performance - and Humphrey Bogart was rarely better (perhaps solely when he played the role of Rick in Casablanca).
However, what I also love about this sort of movie (okay, the casting was superb, as was the script, acting, story, ambience, atmosphere - what superlative cinematography - all based on excellent source material) is that the actors are not classically good looking; instead, they look like real people.
And yes, joy of joys, no specal effects.
You don't need them in many stories, and one of the things I deplore, these days, is the sacrifice of story so that one can indulge in special effects. If they don't support the story, omit them. They are not necessary for the story.
As you say, setting, script, acting - including long scenes, allowing the scene to be set and allowing one to get to know the characters - these are what matter when telling a story and holding the attention and interest of the audience or viewers.
Now, the acting is superb and they inhabit their roles to perfection, but, one of the things I dislike about many American movies is this insistence on a cookie-cutter attractive appearance - often at the expense of sheer acting ability (which is something you do get in European movies, where the emphasis tends to be more on acting ability, and celebrating character acting and roles, rather than the proverbial leading man/lady stuff).
And I love movies which have the courage to go for downbeat endings, for the world and its stories don't always end happily ever after.
Another movie with a similar ambience - one which I absolutely adore - superb source material (courtesy Graham Greene), script, story, ambience, atmosphere, cinematography - and superlative cast and acting, and, for that matter score and soundtrack - is The Third Man.