Is there any documentation anywhere that describes what happens in more details or maybe should I post in the Development Community?
As has been said, the end result is the same.
The compelling reason, and this is not documented explicitly, but inferred, is that installing an new copy of iOS can be a troubleshooting step. If one just wants to set up the phone for a new user, using iTunes to replace iOS is perhaps, a step too far.
If a phone is behaving erratically, you can eliminate an iOS glitch as a cause by replacing iOS AND setting the phone up as a new device for a period of time.
- If the behaviour remains, you likely have a hardware issue. Seek Apple service.
- If the behaviour stops, you have now isolated the issue to software. Next step is to restore the user's backup.
- If the behaviour returns, it was/is something that was installed on their phone.
- If the behaviour now stops with the user's previous apps and data in place, you have resolved the issue by replacing iOS.
If the phone is simply changing hands, erase all content and settings is totally sufficient.