And they try to pinpoint what it is that sets them apart from their miserable neighbors and friends.

宾语从句what it is that sets them apart from their miserable neighbors and friends本身是强调句型。强调主语，然后就强调的主语提问。然后特殊疑问句去倒装改为名词性从句作宾语。

去掉强调句型的it is...that, 句子则为：

And they try to pinpoint what sets them apart from their miserable neighbors and friends.

这就是一个普通的特殊疑问句改为名词性从句。

所以原句中的that并不是通常的定语从句，而是it is...that强调句型的that。