That bootstrapping forum thread linked these steps that Evan used on FreeBSD, where he did not use the --bootstrapping=bootstrapping flag at all. Is that what you finally used with 6.3? Try those commands with 6.2 also, if so.
As for what that flag did, there was better support for bootstrapping before, but it decayed as we stopped using it, since all major platforms now have a well-tested prebuilt Swift compiler. The bootstrap stages you mention were once automatically configured by that flag, but we've since turned off that flag internally in favor of using prebuilt host tools. I imagine Evan will add some other way to do it for 6.2 if that becomes the LTS bootstrap compiler.