I'm going to chop your post down piece by piece in details, bare with me:
Its because the two games I've run with Legend have shown that the choices of the players can better define the game setting.
Have you run two scenarios/sessions or two campaigns? If you have run two one offs, maybe run a campaign for your players, they may prefer using the same characters and having consistency, and carry on from adventure to adventure, feeling their characters are doing something meaningful in the games. If you've run two full campaigns, and are out of ideas, try a completely different setting: space, modern, etc.
The first I ran the only restriction was not being able to select the primitive culture and having to select a spellcasting profession to start off with access to magic.
The second was done via pre-gens from a thread in this forum and as a result they all had access to magic and as I ran the scenario I added a few details which I realised also explained why they had that access.
Why restrict? It could lead to scenes of humor having a primitive trying to communicate with civilized folk. If your worried about them not getting along or a misunderstanding, have them get ambushed during their first encounter, forcing them to fight together, and work from there. Maybe you should restrict characters less, and just give them a printoff with their character background. Or instead of restricting them, or giving them compulsory choices, give them all that stuff for free if it needs to fit your game that badly. Regarding pregens, I hate using them, I want my own characters to play with. You don't need to necessarily explain things, your setting should do that, or the characters themselves as opposed to the players should understand it, if you get me.
My question is because I'd like to run a third game but need a bit of extra input and I'm curious to see what you would select as a means of inspiration.
You aren't really telling all that much about your game. More details of what you are looking for or to do would help us help you. Where do you feel the need to be inspired?
So far I'm thinking setting it on the coast to explain how humanity has survived, but give extra areas to explore say for example they'd rather go exploring by means of sea travel or if they'd rather join a caravan as guards to travel to the next town or settlement, maybe even they'd rather go tomb robbing or staying in town for adventures closer to home.
Humans are tough, unless there is something stopping them in your setting (again, you generalise, but make no explanation, it is like listening to part of a conversation and trying to figure out what the rest is) from surviving, there is nothing really stopping them from living anywhere. Look at our own world and the harsh environments people thrive in.
It seems like, and please don't take offence, your giving players scenarios to play or incentive to go or do things, its more like, 'here you are, go on, do something'. Perhaps putting structure into your game might help? If the PCs aren't really doing anything, why is that? Perhaps take a step back and take a hard look at your scenario or GMing style, look at it with neutrality, and see where if you were a PC what you wold think. Or ask your players. Simple
At this stage I'm not sure what people playing Legend most want from the system and frankly would like some advice.
You see, your wrong there, and I have made that mistake in a similar way. Players don't know what they want when you ask em stuff like that. They want a game, and they want to enjoy it. You might be thinking about the wrong things too much. Why does anyone use a particular system? You're the GM, use what you like and are comfortable with, run a game your enthusiastic about, run a game you'd like to play in. Asking people what they want out of a rules system is the wrong question, ask them what they want out of a campaign, setting, or with their characters.