Put simply, a guitar setup is a process by which a guitar’s playability is optimised. This usually involves (but is not limited to) tweaking of the truss rod to adjust the backbowing or upbowing of the neck, adjustment of the saddle(s) for intonation (to ensure that the guitar is in tune all the way up the neck), raising or lowering of the bridge to set the action (distance of the strings to the frets) and checking the nut to see that it is cut properly. However, none of this will be truly effective unless the frets are level. If the frets aren’t level then it will be impossible to maximise the playability of your guitar as those pesky rogue frets will simply buzz as soon as you start to bring down the action. The levelling of frets is fundamental to any set up. If the guy in the music shop says that he is going to set up your guitar, ask him if he is going to level the frets first. In my experience, very few guitars (particularly new ones) have level frets. The exception to this is guitars from custom builders who spend lots of time on finer details.
Many guitarists feel quite comfortable about adjusting the saddles or the bridge. It’s hard to do too much damage. However, few guitarists are keen to adjust the truss rod – and for good reason. If you must fiddle with it, please make sure that the allen key (or screw driver) is the right size and that it is securely engaged before you start turning it….and please, only make small turns. Just remember, “lefty loosey, righty tighty”. Put a little pencil mark on the rod so that you can go back to the starting point if you stuff up. If it is tight and won’t move – leave it alone and take it to a guitar tech!
As for levelling the frets, don’t even think about it unless you are experienced or you have a crappy guitar that you are willing to sacrifice. You really need to know what you are doing and have the right tools (I have a purpose-built neck jig amongst other things) or you could end up with a major disaster on your hands.
Playing style is a highly individual thing and guitar setups can be very subjective. I always like the guitarists to be there for the final tweaking so that I can make the adjustments according to their playing style. Otherwise, I will simply set it up how I like it and that may not suit everyone. Also, have realistic expectations. If the action is super low and you have a heavy-handed playing style, then the frets will buzz – no matter how good the set up. In this case, you will either have to alter your playing style or raise the action.
Of course, besides improving the playability of your guitar, a good setup will also greatly enhance the tone and sustain. What more could any guitarist want? There is nothing like playing your favourite riffs buzz-free or stretching a note up a tone and then letting the sustain and harmonics take over. Guitar Heaven 
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Cheers,
Timo
