Google published documents named AndroidUsersGuide.
For Android 2.2 is here:
And for Android 2.3 is here:
I found a following description in these documents.
If you want to restore your settings to this phone, from another phone that was running Android release 2.0 or later, you must sign into your Google Account now, during setup. If you wait until after setup is complete, your settings are not restored.
To restore your settings which backed up to Google server, you have to sign into your Google Account during a setup wizard running.
Settings for backup is in Settings > Privacy. If you check this option, Wifi password, Browser bookmarks, Installed Application List, User dictionary of Android keyboard, and Settings are backed up. If you uncheck this option, the backed up data is deleted from Google servers.