Working with setuptools is mostly about building and distributing packages. However, you still need to use setuptools to install packages directly from project sources. And the reason for that is simple. It is a good habit to test if our packaging code works properly before submitting your package to PyPI. And the simplest way to test it is by installing it. If you send a broken package to the repository, then in order to re-upload it, you need to increase the version number.
Testing if your code is packaged properly before the final distribution saves you from unnecessary version number inflation and obviously from wasting your time. Also, installation directly from your own sources using setuptools may be essential when working on multiple related packages at the same time.