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I have a Lenovo Yoga 3 ultrabook. I have made a bootable Windows 8.1 USB flash drive. I would like to know what is the difference between an installation from the 'setup.exe' file in the USB drive's folder, & a regular clean boot from the flash drive? Thanks for any suggestions.

Booting the computer with USB or DVD install media will perform a so called clean install. You have to then reinstall all your software, Windows will be as if it was first time ever you have started that PC, new and fresh. If the computer already contained an older Windows installation, its files will be moved to folder Windows.old, you can then copy your personal files and folders from there to your new user folders.

Windows 10 - Clean Install - Windows 10 blog


Starting the setup from existing installation by launching the setup.exe from USB or DVD install media performs an in-place upgrade installation. All your installed software will be kept, as well as your personal files, and Windows will be upgraded.

Windows 10 - Upgrade Installation - Windows 10 blog


When the version of Windows on USB / DVD is the same you have already installed and installation is started by launching setup.exe from USB / DVD, it's called a repair installation which is used to fix various Windows issues; all your data and software will remain intact but Windows system files will be overwritten.

Repair Install Windows 10 with an In-place Upgrade - Windows 10 blog


Kari

In addition to Kari's explanation - since you mention that it is a Windows 8.1 USB flash drive you have created:
You can only upgrade the existing version of Windows you have installed to the same version or higher by running setup.exe from the flash drive. You cannot downgrade.

To downgrade, say from Windows 10 to 8.1, you have to boot from the USB flash drive and do a clean install.

In addition to Kari's explanation - since you mention that it is a Windows 8.1 USB flash drive you have created:
You can only upgrade the existing version of Windows you have installed to the same version or higher by running setup.exe from the flash drive. You cannot downgrade.

To downgrade, say from Windows 10 to 8.1, you have to boot from the USB flash drive and do a clean install.
Important information which I totally forgot to mention. Thanks.

Important information which I totally forgot to mention. Thanks.
I've been away for a while, I'm posting just to say thank you Kari & NavyLCDR. Everything worked out fine & I have both W.8.1 & W.10 on my laptop & Ultrabook.

Also if you execute setup.exe it will download any windows updates beforehand and install them while installing windows

Also if you execute setup.exe it will download any windows updates beforehand and install them while installing windows
Only if user selects to download updates:


Solved.