It does something allright but I can’t seem to be able to find any information on this in the documentation and too lazy to read code :)
There’s no ghost setup instance command 
$ ghost setup --help
ghost setup [stages..]
stages can be one or more of nginx, ssl, mysql, systemd, migrate, linux-user
(...)
According to the documentation there is not yes. But you would be surprised to see that there actually is if you run it :)
It does something but no idea what.
Oh, that’s an internal step 
It adds the instance to the list of installed instances (ghost ls), and makes sure that the content path is configured in the config file.
Edit: these internal steps aren’t designed to be run independently