I think arbitrary is actually correct.
There is no "right" action height, so the "ballpark" ones used, are just that.
Sure, there's fret ends, and fret leveling, but tbh, those are defects, and shouldn't be part of a new instrument.
Setup could also be compensating the saddle, but that's not typical,
So, aside from correcting any fret defects, it's mostly adjusting string height, if they're doing it right.
Kala's tend to be fairly good from the factory, where they 'setup' the instrument before sending it out.
But the height.. that's a thing that makes alot of difference.
Factory tends to send ukes out with high string height, because it cheats a bit on the leveling.. meaning you can be farther off level, and still not buzz if the height is higher. The lower the action, the more picky the leveling becomes in avoiding buzz.
But low action is alot easier to play on finger style, barres, etc.
I think... they get away with more slop in ukes, because mostly people strum in first position, which is the most forgiving.
But running high action.. makes intonation bad farther up the neck because you are deflecting the string farther in the middle of the fretboard than near the nut, and stretching the string farther, makes notes go sharp.
The same can be said by making the nut high. It helps prevent buzz, but you have to use alot more pressure near the nut.
This is really hard to describe because if you're new, you don't have anything for comparision.
But a well setup uke.. is soooo much easier and pleasant to play. A GOOD setup is definnitely worth the $50.
The question I would have, is what the setup you are buying is going to get you.
I think alot of the big boxes, will just check if you buzz, and maybe do a little leveling, and fret end grinding.
That I'm not sure is worth the $50.
But if they're leveling, adjusting the nut, and saddle height.. that's probably worth it. And if they're compensating the saddle too... you're probably going to pay more than that.
"Setup" is too generic. You need to know exactly what you're getting for your money.