There are two ways of defining the blog page.

1. By using the ‘Blog posts’ page template:

When this page template is selected there will appear options related to this template that will let you to select the desired layout, the number of posts and if you need you can also filter the result based on selected categories:

2.  The 2nd way to set up a Blog page is to select a page under the Settings->Reading. But if you select a page from here, then even if that page is using the ‘Blog posts’ page template, none of the template options will work because it will be ignored.

The options below will work for blog page selected under Settings->Reading :

Check the following video to see the entire process: