Those files are used and created by Pi-hole during initial installation. While they don't interfere with networking directly, they each have their specific use.
While local.list allows using pi.hole as a valid name in your network, Pi-hole's IP addresses in setupVars.conf are those used during setup. The latter is included routinely when creating a debug log, and assessed by moderators or developers when trying to pin down a problem with your configuration. In your friend's case, this may result in false analysis results.
I'd recommend changing IP addresses to the correct values in both files
For further details on files used by Pi-hole look here: What files does Pi-hole use?