May a municipality create two zoning districts that have identical uses but different setback, side yard, and etc. restrictions?

Yes. The zoning enabling statute only requires that zoning restrictions be uniform within each zoning district and specifically authorizes regulations in one district to differ from those in another. Wis. Stat. sec. 62.23(7)(b). As long as there is some rational basis for the different restrictions, a municipality may create two zoning districts that allow the same land uses (e.g., single-family residential) but impose different setback, side-yard, etc. requirements on the structures allowed in each district. For example, a municipality might reasonably decide to create a single-family residential zoning district for older neighborhoods that allows the same uses as are allowed under an existing single-family residential district classification but impose less stringent setback and side yard restrictions in the older neighborhood zone. A rational basis for the different classifications would be the smaller lot sizes in the older neighborhood. One significant advantage to this classification scheme would be a reduction in the number of zoning variance requests for structures in the older neighborhoods.