The basics of setup in KK are generally accurate (widening the front gives more front grip), but I wouldn’t use KK to test for real-life. Setting the kart up in the game is more about getting around the specific wonkiness of not-totally-perfect physics rather than actually tuning the kart in a realistic way.
For example, there should be no reason to run the seat low and back and the front ride height at its lowest setting in normal conditions in real-life but in the sim, that’s sort of how you need it to be quick. You’re missing a lot of the intricate detailed feedback you get from a kart, so most adjustments feel like they have similar effects. For instance, most adjustments that “add front grip” in KK feel like they have almost exactly the same effect. In real-life, each adjustment feels specifically different, even if they are attempting to the same thing. You lack that fidelity in the game.
I pull my hair out more in KK trying to dial in the setup than I do in real-life. Some things react in wholly unexpected ways in the game.