In Walker's "Everyday Use," the set-up (it's a noun and is hyphenated) is the way in which the writer has constructed and contrived the visit by Dee, about which the story tells.
The initiating incident (the visit) is a part of the set-up, as is the setting. The story prepares the reader for the visit by describing the mother, Maggie, and Dee when she was younger; by revealing the friction between Dee and the other two; by revealing Dee's attitude toward the two and their home and their lifestyle, as compared to her attitude toward the outside world.
The set-up prepares the reader for the confrontation that occurs once Dee arrives. The writer constructs the story in such a way that the relevant issues are revealed once Dee arrives.
In the short story "Everyday Use" the initiating incident is a visit from the daughter Dee. Dee has gone off to college and made something of herself. She has escaped the poverty in which she grew-up. Her visit creates a need for the mother to prepare the yard and house and starts both mother and her other daughter Maggie contemplating the visit.
The setting is a small clapboard house in the south. The windows are holes cut into the walls. The outside front yard is swept clean in preparation for Dee's arrival. Inside the house is poor furniture including benches that were raw and handmade.
The set-up is that when Dee comes home she is no longer ashamed of her past and the poverty but wants to embrace it for its social and modern significance. All things rural and poor have become the new wave heritage in fashion. Dee brings up the idea of wanting to take her grandmother's quilts. This sets up the problem of the mother having to decide which daughter to give the quilts. Dee only wants the handmade quilt with no stitching and wants to use it as a decoration. Maggie wants the quilt for everyday use. Maggie will never stand up to Dee or express herself because she is shy and intimidated by Dee.
In the end Maggie gets the quilt.