Set occurs when the wood is overstressed. Simple as that. Wet wood, thin/thick spots, or even wood that's not dense enough for the weight.
Since going to No Set Tillering, I can tiller a bow much faster and wind up with 1" of string follow or less.
As for tempering, I employ it after NST. If the bow is to be a personal hunting bow, I jsut temper it straight. This increases the compression strength, and if the bow only has 1" of set at this point it leaves it "overbuilt". That way I know that unless something really bad happens, that bow is going to be like that for as long as it holds together. If I want to increase performance, I'd temper in a little reflex. If the performance is with lighter arrows, you narrow the bow to get back to the original weight/set, but now the bow will have less mass. If you need to sling a heavy arrow better, just leave the reflex.
If a piece of wood is coming in too light (starting to take set despite no flaws in thickness at whatever weight) I temper it early and possibly sinew it. Like with a short bow. The tempering and sinew help "add mass" and keep set low, which helps little bows shoot heavier arrows.
That's just my experience and some of what I've read from those who know much more than I do