Q: Erase all contents and settings

Yes, it deletes everything on the phone.

What?  If you go to Settings>General>Reset and tap Erase All Content & Settings your phone will revert back to the condition it was in when you first took it out of the box.  You have to go back through the setup screens and reactivate it.  You then have the option to restore to a backup if you have one, or set it up as a new iPhone.  If you do the latter there will be nothing on it.  If you're saying that your apps were still there, you must have done something else, or synced them back to your phone using iTunes.

Sounds like you tapped either Reset All Settings or Reset Network Settings, but not Erase All Content & Settings.

Yes, erasing all content and settings is normally done when you either want to wipe the phone because you are selling it or giving it to someone else, or you want to restore from an iCloud backup (which can only be done by going back through the setup screens again and selecting this option).  At any rate, it's designed to return the device to it's out-of-the-box state.

You're welcome.

If resettint DOES NOT WORK,  follow this advice by 626quagmire. http://www.youtube.com/watch?v=oiQbdmfYwJE. It definetley works. Go to settings,general,cellular, and turn cellular data off. Then connect to wifi. Ta da

I have this problem related to the topic, when i pressed reset all contents and setting, after everything, all of the icons are gone, when i tried to restore it, it wont work -_-, what will i do?

This is for a IPOD touch 5th generation.

By doing this, will it reset the iOS setting back to what it was when I bought it or will it still have the iOS 9.1.

This is for a IPOD touch 5th generation.

By doing this, will it reset the iOS setting back to what it was when I bought it or will it still have the iOS 9.1.

The "Erase All Content and Settings" will just erase the device without touching whatever iOS version was already installed.  So to answer your question, no this won't put the original iOS version on as when it was new -- it will still have the same version that was installed prior to erasing.