An acoustic guitar should always be kept in an environment where the relative humidity is between
40% and 60%. If a guitar is exposed to significantly less or more humidity than that, bad things
start happening. A good place to read up on the effects of humidity on an acoustic guitars is the
Taylor tech sheets page.
It does not make sense to work on the setup of your guitar if it is too dry, or way too wet. The reason is that dryness causes the top of the guitar to sink, while too much humidity causes it to rise. When the top rises or sinks, the bridge will rise or sink with it, and that will raise or lower the action of the guitar. If you perform the setup in a state of improper humidification and then later on fix the humidification, your action will be way off, rendering your setup work pointless.
To check whether the humidification of your guitar is good enough to perform setup work, place a ruler across the top of the guitar as shown in the photograph below.
You want to see a healthy gap beween the ruler and the edge of the guitar's top on both sides. I am
not aware of any "recommended value" for the size of that gap. From experience, I'd say 1/16''
on each side is about right.
If the ruler reveals the top to be flat, or even sunken, the guitar is too dry. Use a guitar humidifier to rectify the problem. If the guitar has been very dry for a long time, you should check the body of the guitar for cracks that may have developed.
Over-humidification is less common and not quite as dangerous to your guitar as dryness. But if the top of your guitar appears very bulgy, you should look for other symptoms of over-humidification as explained in "Symptoms of a Wet Guitar" on the Taylor tech sheets page.
Once your guitar is properly humidified, you are ready to start the setup work.