During installation, the 'set up database' phase was skipped. Is that normal? This isn't the first time I install Drupal 7 locally, but it is the first time that during installation the 'verify requirments' and 'set up database' phases were skipped. 

I did have databases set up with the same name as the sites (testsite.localhost and testsite2.localhost). Is that why those steps were skipped?

I did look though the databases in phpmyadmin and it looks as though both installations were populated properly.
Did you perhaps already have a settings.php file in place with the database information already in it? If Drupal can find that, it will use that information instead of prompting you and creating a new settings.php file itself.