I don't think it is a setback. They are building them all the time and they are iterating very fast. I don't think they are close to reusing them so they are just interested in seeing what works and what doesn't and then iterate on the design in subsequent launches.
I wouldn't be surprised if this Starship didn't incorporate all the improvements they learned about during last few launches (and booms).
The next one (in a few days) is SN15, which is a major upgrade with "hundreds of design improvements across structures, avionics/software & engine.", according to Elon.
"Next major technology rev is at SN20. Those ships will be orbit-capable with heat shield & stage separation system. Ascent success probability is high.
However, SN20+ vehicles will probably need many flight attempts to survive Mach 25 entry heating & land intact."
Surviving the orbital entry and landing is probably the most difficult challenge yet. After that the next major challenge is landing on Mars.
According to the article, they're probably going to skip over SN12, 13, and 14 in order to try with a later design. That makes sense, since it's likely that several crashes happen between when construction starts on a new rocket and it finishes. Once it's done, they may have design might already be out of date.
> Fortunately, as part of its iterative development program, SpaceX is building a Starship vehicle at a rate of every two to three weeks. So the next prototype—likely to be SN15 as the company skips ahead toward a more advanced version—may be ready to fly in several weeks. Still, SpaceX would have liked to have gotten this one back in one piece.
I wouldn't be surprised if this Starship didn't incorporate all the improvements they learned about during last few launches (and booms).