How do I setup my blog page?

To setup the blog page, in your WordPress admin panel, navigate to Settings > Reading. Assuming you already have a page named "Blog", for the Front page display, select "A static page" and choose your "Blog" page as the Posts page. This is what you should be seeing on your screen:

Blog — How to change the layout?

Version 1.9 introduces new layout options for the Blog layout. To switch to the style that best suits your needs, navigate to Appearance > Customize > Blog. This is what you should be looking for on your screen: