What does ‘–set-upstream’ do?

To avoid confusion,
recent versions of git deprecate this somewhat ambiguous --set-upstream option
in favor of a more verbose --set-upstream-to option
with identical syntax and behavior.

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git branch --set-upstream-to <remote-branch>

sets the default remote branch for the current local branch.

Any future git pull command (with the current local branch checked-out),
will attempt to bring in commits from the <remote-branch> into the current local branch.

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One way to avoid having to explicitly type --set-upstream / --set-upstream-to is to use its shorthand flag -u as follows:

git push -u origin local-branch

This sets the upstream association for any future push/pull attempts automatically.
For more details, checkout this detailed explanation about upstream branches and tracking.