Understeer And Oversteer
Friction circle is a measure of how fast the car can accelerate, brake and turn.
In reality, road course cars typically have egg-shaped G-G plots. This is because they tend to brake much harder than they can accelerate. For example, a Miata might brake at 0.82 g but only accelerate at 0.25 g. A Porsche might brake at 1.36 g but only accelerate at 0.35 g.
In A Corner
Understeer and oversteer in a corner are states of a car in that particular corner.
Of A Car
We say that a car understeers if it usually, often or too frequently experiences understeer in corners that it drives through.
There is a lot of meaning packed in that sentence, so let's take it apart.
Suppose we are able to keep track of every corner on every lap that a car ever drives. In each corner the car might understeer, oversteer, be at the grip limit or be under the grip limit. If the car understeered in more corners than it oversteered, over its lifetime, we might say that the car understeers.
The first important takeaway is that whether a car understeers or oversteers depends on which turns it takes. A car which understeers in high speed corners might oversteer in low speed corners, therefore the type of corners present at the tracks where the car is driving influences whether the car is considered to understeer or oversteer.
Another important bit is that what the car does depends on how it is driven. We can say what the car does depends on who is driving it, but what we really mean is how that person is driving their car, i.e., the driver's driving style. For example, a trailbraking driver obtains more rotation out of their car at corner entry compared to a driver who does not trailbrake. Therefore, a trailbraking driver may set up their car to understeer more, but would not say that their car understeers in turns because the driver induces sufficient rotation via trailbraking.
Of A Car Setup
When we say that a car is "set up to understeer", we typically compare how different cars would behave when driven identically. That is, we specifically do not consider that some drivers rotate their cars more than others.
A car, however, can be set up to understeer in certain types of corners but not others.